National Road User Charging: Theory and Implementation

Abstract

The potential benefits of introducing road user charging, in terms of limiting the negative effects of driving such as congestion and harmful emissions, outstrip those that could be achieved with fuel tax alone. In this chapter, we explore the theory and evidence underpinning road user charging, with a particular focus on the role of the policy in addressing climate change damage costs. In practice, countries have been hesitant to adopt national road user charging for cars. With the exception of the city state of Singapore, none has yet done so. Instead, road-related taxes, mainly on fuel and car ownership, are commonplace and a major source of tax revenue. It emerges that there is a diverse patchwork of approaches to charging for road use throughout the world, and varying calls for reform. Greenhouse gas reduction is not always at the centre of the road user charging debate. However, national road user charging appears to offer a holistic solution: it is therefore interesting to explore what role within it climate change costs should take, and what impact on climate change such a solution might have.

If road pricing was implemented nationwide, we would all face different prices for the trips we make. When we travelled on uncongested roads we would generally pay less, but on congested roads we would generally pay more. Paying the family road bill would probably be like paying the phone bill (DfT 2004a:2).

The benefits of road pricing come not so much from the overall cost, but from the differentiation in cost that it makes possible. Major benefits could be obtained without road users overall paying more than they otherwise would in fuel duty. But additional revenue could fund more transport infrastructure or services, as well as providing higher environmental benefits (DfT 2004a:3).