Wednesday, January 1, 2014

Smart-Shifting Road Costs: Pay-As-You-Go Pricing

Imagine your municipal property tax bill being reduced by almost 25%. Impossible? Not if we shift one of our biggest municipal costs off of the backs of taxpayers, and pass them along to benefitting users instead. And the biggest winner of this shift will be our planet’s climate.

Road pricing has become a hot topic lately, as the balance between road maintenance costs, transit and the costs of environmental and social externalities remains tilted in favour of motorists, at the expense of taxpayers. In Greater Sudbury, roads and maintenance eat up about 23% of our municipal property tax bill (See: "Toward Fiscal Sustainability: our Municipal Property Tax at Work", City of Greater Sudbury online publication). In Ontario, approximately $3.3 billion is spent on highways and related road costs each year (See: “Where the rubber meets the road: How much motorists pay for road infrastructure”, the Conference Board of Canada, October 2013)

While gasoline taxes help offset a portion of road maintenance costs, many of the costs related to personal vehicle use are picked up by taxpayers, including social and health costs related to an increasingly sedentary lifestyle. The economic costs of climate change from transportation sector carbon emissions are also put on the taxpayer’s tab, often in the form of debt we pass on to our children.

In Ontario, congestion on our roads and highways has been estimated to contribute over $6 billion in lost economic activity annually (See: "Costs of Road Congestion in Greater Toronto and Hamilton Area; Impact and Cost-Benefit Analysis of the Metrolinx Draft Regional Transportation Plan", Metrolinx, December 1, 2008). Beyond social and environmental concerns, there is a clear public interest in operating a more efficient and effective transportation system.

Pay-as-go road pricing would shift the road cost burden from property and income taxes onto the primary users of the transportation system – motorists. The shift will almost certainly reduce vehicle trips and gasoline usage, and lead to a corresponding reduction in greenhouse gas emissions. In 2011, emissions from Ontario’s transportation sector accounted for almost 34% of total emissions (See:“Failing our Future: Review of the Ontario Government’s Climate Change Action Plan Results”, Gord Miller, Environmental Commissioner of Ontario, June 2013).

Existing Global Positioning System (GPS) technology can today track when and where vehicles travel. As with electricity bills, time-of-use pricing could encourage off-peak travel to reduce congestion and vehicle idling. Prices could be adjusted depending on vehicle type and environmental impacts. Meters which monitor real-time expenses could easily be installed in vehicles, providing motorists with critical decision-making data.

Similar pricing schemes are already being used in places like Singapore, and London, England, where congestion fees have become an integral part of a commuter’s travels. And, over the last decade, several national and regional governments have been studying the use of GPS for broader road pricing initiatives (See: “UK concludes GPS based distance road pricing trials”, Road Pricing, August 2011)

Pay-as-you-go road pricing would result in lower property taxes and a corresponding reduction to income taxes or some form of taxpayer rebate. The shift to road pricing would mean that conservation-minded taxpayers could end up with more money in their wallets. Motorists, too, would benefit from decreased congestion.

Governments would be able to invest in needed low-carbon transport options, such as inter-city rail and public transit, to better meet the needs of tomorrow’s commuters.

What’s lacking, of course, is the political will to challenge the way we pay for the privilege of automobile use. However, per capita North American car ownership is peaking, and fewer people are relying on costly personal vehicle ownership to meet their transportation needs. In part, this shift is underway as a result of a growing awareness of the environmental implications of personal vehicle use.

As the priorities of the public begin to shift, so too will our outlook on how we pay for those priorities. Equipped with the knowledge that increased personal vehicle use is a detriment to our environment, the public subsidization of that activity simply can’t be justified. Moving to a pay-as-you-go personal transportation system will tilt the balance back in favour of the taxpaying public, while simultaneously reducing climate changing greenhouse gas emissions.

Steve May is an Officer of the federal and provincial Nickel Belt Greens


(opinions expressed in this blog are my own and should not be interpreted as being consistent with the views and/or policies of the Green Party of Canada)

Originally published in the Sudbury Star, Saturday December 28th, as "Time for motorists to pay full cost of roads", and online Friday, December 27th as "We need pay-as-you driving".

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