The take from tolls

Lawrence Solomon
National Post
February 27, 2003

Less than two weeks ago, London, England, proved that cities could easily eliminate traffic congestion. By charging vehicles £5 per day to enter central London between 7:00 a.m. and 6:30 p.m. on weekdays, the city convinced some 50,000 Londoners to change their schedules, to take public transit, to join a car pool, to work from home, to come by bicycle, to buy a scooter, to take a taxi, to walk part of the way or all of the way, or to otherwise change their behaviour. As if by magic, traffic became free flowing.

The driving public was pleased: No longer did cars crawl in traffic at average speeds of 3 mph to 4 mph. Business lobbies like the London Chamber of Commerce were pleased: London-area congestion was costing the national economy an estimated £4 billion a year. Local residents were pleased: Gone was the noise, safety hazards, and parking frustrations of a city with too many cars competing for too-little available road.

Within days of London’s spectacular success, politicians, bureaucrats and policymakers had formed a parade. In the United Kingdom, some three dozen municipal governments – Manchester, Leeds, and Edinburgh among them – signaled that they may follow suit. Outside the U.K., authorities in Amsterdam, Athens, Copenhagen, Helsinki, Rome, New York, Paris, Genoa, Brisbane, Tokyo, Tehran, Hong Kong, and Kathmandu all gave road tolls the thumbs up. Canada’s Transport Minister David Collenette prodded Montreal, Toronto and Vancouver to follow suit. “At some point, congested cities are going to have to take radical solutions,” he declared.

Governments are in gear. They see the potential in savings to the overall economy and they see the potential to clean our air and improve the public health. And they see one other potential, one they are not about to trumpet. They see the potential for the biggest government revenue grab since the income tax swept in almost a century ago.

London estimates that the tolls to enter central London – an area of about eight square miles that comprises a mere 1.3% of Greater London’s area – will yield it between £130 million and £150 million in profit a year. That is just the beginning of the financial flow to lubricate London. Transport for London, the city’s public transit company, estimates that each pound raised from congestion charges will allow the city to borrow another 10 from banks and lending institutions.

The financial windfall doesn’t end there. The city eventually plans to toll the other 98.7% of its territory, starting with the congested areas around Heathrow airport and Canary Wharf – these would follow a May 2004 municipal election, in which London Mayor Ken Livingstone plans to run for reelection on the success of the congestion charging system. Within a decade, once satellite tolling technology becomes feasible, Livingstone plans to toll all Londoners, on all congested routes.

The U.K. government’s ambitions are no less grand. Within four years, the government expects satellites to charge all trucks using any road any time anywhere in the U.K. And it plans to extend that scheme to all private automobiles in the next decade. Later this year, in what will be a major trial, cars near Leeds will be fitted with electronic tagging devices and their trips tracked by roadside detectors.

Following the popularity of London’s daring scheme, “there is no question a national charge scheme has moved up the agenda,” states David Begg, chairman of the government’s Commission for Integrated Transport, the agency that produced Britain’s blueprint for universal tolling. The tolls in the U.K. would start at three pence (about eight cents) per mile on low-use, rural roads, and peak at £1.30 per mile travelled on heavily congested roads. The revenues that would then flow into government coffers are mind-boggling, but not nearly so mind-boggling as the widespread support that U.K.’s electronic tolling garners.

Not only is the U.K. public surprisingly receptive to tolling all vehicles, pressure groups are too. The U.K.’s trucking lobby likes it – taxes paid by the U.K.’s trucking industry will decline by the amount it pays in tolls, giving U.K. trucks an advantage over competitors that come to the U.K. from the continent. The lobby for railroads, which pay to travel their own roadbeds, think it only fair that cars and trucks play by the same rules; and the Confederation of British Industry wants to recoup some of the £18 billion a year that delays cost its members in lost time and lost business. Even the Royal Automobile Club, ever-wary of curbs on the car, tentatively endorses road tolls.

Mr. Begg’s commission, like many other champions of road tolls, argues that tolls should replace automobile taxes, gasoline taxes and other road-related charges. The public’s great fear over road tolls, of course, is that the tolls will be piled on top of taxes. “Does government ever drop old taxes when new ones come in?” the public has been asking rhetorically.

In fact, history is full of examples of dropped taxes – the U.K.’s truckers can attest to that. The most spectacular case in the last century involving the rise of the income tax. Before income taxes funded government activities, our governments financed themselves through punishing tariffs on imports – the average U.S. tariff exceeded 50% – that shut down the great potential for international trade. As the income tax rose in importance, the tariffs quickly came down to single-digits or disappeared altogether, leading to an unprecedented era of consumer choice and globalization.

The stage is set for another historic realignment in government financing. Conservatives have generally championed the replacement of taxes with user fees; liberals have generally argued that the automobile be made to pay for all the costs it foists onto society. Both camps now have their opportunity, as do the rest of us, to put their visions in place and intelligently ration our roadways – the only entirely free public utility that almost all governments still provide, but at entirely unnecessary economic and environmental costs.

Lawrence Solomon is executive director of Urban Renaissance Institute and a director of PEMA, a non-profit with a patent pending on toll road technology. E-mail: LawrenceSolomon@nextcity.com.

Related articles:
Toll roads v. the Canadian Accident Association
London’s green streets
Toll skeptics be damned: London’s rolling
The toll on business
Don’t tax, toll: Presentation to the Canadian Home Builders’ Association
London unjammed
Don’t tax, toll
Toll today’s roads, don’t build more
How the free road lobby led us astray
Toll road commentary
Road safety
How to cut highways’ human toll

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