Nov 1, 2008

From fuel taxes to 'pay as you drive'

The US has started trials for distance-based charging mechanisms aimed at ultimately replacing the gasoline tax.

Motorists in several US cities are being recruited to try out a new mileage-based road user charge system. The Public Policy Center of the University of Iowa is leading the trial. This is very good news (although I realise this trial is only the first step in a very long process with no gurantee of political success).

Smart folks like Bern Grush and Robin Chase have been calling for usage-based pricing for a long time and pointing out that motor fuel taxes are gradually failing us. The Netherlands, Singapore and the UK apparently have plans for distance-based charging too. Germany and Switzerland already charge heavy vehicles based on distance and weight.

There are spin-off opportunities here. I hope they don't get missed!

It would be natural for people to be suspicious about having 'extras' that piggy-back on a new user charging system. But I think it would be a great pity if the mechanisms chosen for mileage-based user charging cannot exploit other important spin-offs as well, while still protecting privacy.

Exploiting all of the spin-offs could amplify the benefits and make "Pay as you drive" (PAYD) charging more cost-effective.

Any distance-based charging mechanism should be flexible enough to ALSO:
  • allow for performance-based parking pricing and handle per-minute parking pricing (see Grush)

  • help with PAYD Insurance applications

  • allow registration fees or 'road taxes' to be turned into PAYD fees

  • charge differentially for driving at different times and different places (and hence provide for congestion pricing)

  • provide for reliable measurement of total vehicle mileage, so that distance-driven can become a reliable part of vehicle depreciation calculations and reduce odometer fraud in the used vehicle market

  • even allow time-of-purchase taxes to be 'variabilised' if necessary (as I argued in a paper - see here for publisher site and here for pdf preprint - this would allow such fees to send their usual signal to vehicle buyers but would prevent them adding to fixed costs by turning them into a variable cost).

If I am not mistaken, there are technologies already out there (ask Bern Grush and Robin Chase) that could do these things AND still ensure privacy. The Iowa system may also have these features, but I am not sure. Can anyone confirm?

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