Market Reforms
Comprehensive Transportation Market Reforms
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Victoria Transport Policy Institute
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Updated 29 May 2015
This chapter describes various transportation price and market reforms that encourage more efficient transportation and support TDM objectives.
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The mode of taxation is, in fact, quite as important as the amount. As a small burden badly placed may distress a horse that could carry with ease a much larger one properly adjusted, so a people may be impoverished and their power of producing wealth destroyed by taxation, which, if levied in another way, could be borne with ease. -Henry George |
Transportation Market Reforms include various policy changes that result in more efficient and fair transportation pricing (Market Principles). Specific Market Reforms are described below.
Full cost pricing (also called marginal cost pricing) means that users pay directly for costs imposed on society by their vehicle use (Transportation Costs). At a minimum, this includes recovery of government expenditures on roadway facilities and traffic services (Wachs 2003; Balaker and Staley 2006; Forkenbrock 2006; Subsidy Scope 2009). It can also include recovery of the equivalent of rent and taxes for land used for roadways; charges for various external costs caused by motor vehicles, including unpriced congestion, uncompensated crash damages, parking costs; and environmental damages, and converting some fixed costs into variable costs (Deen 2003; Parry, Walls and Harrington 2007; Clarke and Prentice 2009). Many specific TDM strategies can help implement Full Cost Pricing, including various types of Road Pricing, Parking Pricing and Distance-Based Fees. Table 1 summarizes the applicability of various pricing strategies to more accurately charge for various costs. Because motor vehicle use imposes several types of costs, optimal transportation pricing requires several types of user fees.
Table 1 Applicability of Pricing Strategies To Various Costs
|
User Fee |
Roadway |
Parking |
Congestion |
Crashes |
Pollution |
|
Road Tolls (fixed rates) |
2 |
|
2 |
1 |
1 |
|
Congestion Pricing (time variable) |
2 |
|
3 |
|
1 |
|
1 |
|
2 |
|
|
|
|
2 |
|
2 |
|
1 |
|
|
3 |
|
2 |
3 |
3 |
|
|
|
|
1 |
3 |
2 |
|
|
|
3 |
2 |
|
1 |
|
|
1 |
|
1 |
|
3 |
Rating from 1 (slight benefit) to 3 (very beneficial).
Since governments must tax something to raise revenue, many economists recommend shifting taxes from socially desirable activities to activities that impose external costs (Durning and Bauman 1998; EEA 2000; OECD 2001; Parry and Small 2004). This includes Carbon Taxes, which are special taxes based on fuel carbon content intended to encourage energy conservation and climate change emission reductions. Revenues can be used to reduce employment and general sales taxes, resulting in less vehicle travel and more employment and business activity. This can provide multiple benefits, including economic development, environmental protection, and more efficient transportation.
An optimal tax structure is economically neutral. It would not favor automobile expenditures over other transportation modes, transportation over other consumer expenditures, or transportation facilities over other investments. Some current tax policies unintentionally favor automobile use (Moret, Ernst & Young 1994; Clarke and Prentice 2009). For example, tax policies encourage employers to provide company cars or offer generous mileage reimbursement rates as a perk (CE Delft 2012). In some countries, more than a third of new vehicles are purchased as company cars (Luk and Richardson 1997). Of the vehicles provided by employers to employees, typically 15-20% of their mileage is for personal use (Runzheimer 1996). One major study estimated that current company car tax policies increase business mileage by approximately 5%, adding about 1 billion miles of vehicle travel in the United Kingdom (Ashden Trust 1997). Another study (Gutiérrez Puigarnau and Ommeren 2007) found that company car subsidies increases ownership by about 0.48 vehicles per household, resulting in social welfare costs estimated between €450 and €1,000 per company car, totaling between €10 and €20 billion for Europe overall. CE Delft (2012) estimated even larger subsidies. Kenert and Kuhfeld (2007) compare vehicle tax structures in various European countries and recommend a variety of reforms to reduce unintended distortions and help achieve strategic objectives, such as pollution emission reductions.
Employee mileage tax deduction and reimbursement rates are generally much higher than the marginal cost of driving, motivating employees to maximize their automobile travel (Dubner 2008). As one motorist explains:
I love the mileage reimbursement. It probably costs me about 30 cents a mile to drive my Corolla, so every mile I drive for work gets me 20 cents of tax-free income. Other people at my company think the same way. Not surprisingly, carpooling is unheard of around here. – Dan (Dubner, 2008).
Employee parking subsidies are often exempt from income taxes, and land devoted to parking is often taxed at a lower rate than if the land was used for a building. As a result, a typical employee must earn more than $1,500 in annually pre-tax income to pay directly for a parking space that costs their employer $1,000 in rent or mortgage costs. This creates an incentive for employers to provide free parking as an employee benefit, but without Parking Cash Out policies, employees who use other modes receive no comparable benefit (Potter and Rye 2000).
Industrial policies can also be reformed to avoid favorable tax treatment and indirect subsidies that encourage fossil fuel production (Koplow 2010). This could include changes to investment depreciation tax policies, and internalization of shipping facilities and energy security costs (such as costs associated with the Strategic Petroleum Reserve).
One TDM strategy that can be relatively easy to implement is to implement, gradual and predictable (less than 10% at any time) long-term Fuel Tax Increases. This is particularly appropriate in jurisdictions that have traditionally subsidized or undertaxed fuel. At a minimum, fuel taxes should cover basic roadway expenditures (a minimum tax of about 10¢ per liter), or more to fund other transport sector expenditures (including subsidies for rail and public transit services), and contribute to general funds (Metschies 1999; IMF 2010; Crane, Burger and Wachs 2011). Puentes and Prince (2003) find that U.S. fuel taxes would need to more than double if user fees are to cover all roadway expenditures.
Current transportation pricing methods have several problems. Fuel taxes and vehicle registration fees do not accurately reflect many of the costs imposed by a particular vehicle. Fuel tax revenue is likely to decline in the future as vehicles become more fuel-efficient and shift to alternative fuels. Conventional parking pricing and road tolling systems are inconvenient and expensive to operate. New Pricing Methods can overcome these problems.
Current land use planning, regulatory and fiscal practices often encourage lower-density, urban periphery, Automobile Dependent development patterns. A number of reforms can help create more neutral policies, supporting more efficient land use development. These reforms include changing zoning codes and development practices, supporting infill development, development fees and utility pricing that reflect the higher costs of dispersed development, and support for brownfield redevelopment (Elkind 2009).
Least-Cost Planning (or Integrated Planning) means that demand management strategies are given equal consideration as capacity expansion in planning and investments. This helps overcome current practices that tend to favor capacity expansion and motorized modes (Comprehensive Transportation Planning). Least Cost Planning allows TDM to be implemented when it is the most cost effective solution overall.
Current transportation planning and funding practices often favor capital expenditures over maintenance and operations. Capital projects are considered prestigious (public officials can participate in ribbon-cutting ceremonies and have their names on plaques attached to new roads, bridges and rail facilities) and many transportation funds may only be used for major capital improvements. This encourages jurisdictions to expand transportation system capacity and implement major new projects even when they have inadequate resources to maintain and operate existing facilities, or when incremental improvements to existing facilities and demand management strategies would provide greater economic benefits.
“Fix It First” means that transportation planning and funding give top priority to maintenance, operations and incremental improvements to existing transportation facilities, and major capital projects are only implemented if there is adequate additional funds. The U.S. federal ISTEA program, and some state transportation funding programs are based on Fix-It-First principles (STPP, 1998).
Some current planning and investment practices favor automobile-oriented transportation improvements over other modes, and favor transportation over other types of public expenditures (Sussman, 2001; Meyer, 2001; Beimborn and Puentes, 2003; EWG, 2004). Current planning practices often exaggerate the benefits of highway projects and understate the benefits of TDM solutions (Evaluating TDM). Comprehensive Planning can help correct these errors. Many jurisdictions have funds dedicated to highway and parking facilities that cannot be used for other transportation solutions even if they are more cost effective overall. Applying Least Cost Planning allows all types of transportation improvement to be considered equally.
Table 2 Comparing U.S. Transit and Highway Funding Rules (Beimborn and Puentes, 2003)
|
|
Transit |
Highways |
|
Federal Funding |
Current federal law authorizes as much as 80% federal share, but FTA practice is to recommend only projects with maximum 60% federal share. The Bush administration proposes a 50% or lower share. |
Federal match is 80-90%, depending on program. Program funds are allocated by formula. Most states have dedicated fuel tax and licensing revenues that make it easy to provide matching funds. |
|
Project Criteria and Justification |
Extensive list including cost effectiveness and financial plan. |
No requirement for cost effectiveness. |
|
Land Use Impacts |
“Transit supportive land use patterns” a key project selection criterion. |
Land use impacts of project not considered. |
|
Performance Evaluation |
Peer comparison is mandatory and reported to Congress. There is a detailed process used to compare alternative projects. |
Peer comparison is rare. Alternative comparisons are optional at state level. |
|
Information Transparency and Accessibility |
Information and data are publicly accessible and transparent. |
Information and data are difficult to access and unclear for the general public. |
This comparison indicates that planning and funding practices tend to favor highway over transit, skewing transportation systems to encourage automobile use and discourage alternatives.
Higher levels of government (federal, state, provincial) often limit the types of taxes and fees regional and municipal governments can apply, which often discourages the use of efficient transportation user fees (Institutional Reform). In particular, restrictions on Road Pricing, Parking Taxes and Location-based Utility Fees should be eliminated, and local governments should be encouraged to use tax and funding options that encourage more efficient travel behavior and land development practices. In other words, if governments must raise revenue, taxes that provide double dividends (i.e., that also reduce traffic congestion, crash risk, pollution problems, etc.) should be favored.
Countries can establish import and industrial policies to limit motor vehicle ownership and favor efficient travel modes. Non-motorized vehicles (bicycles and pushcarts) and buses can have relatively low import tariffs and taxes, while private automobiles and fuels can have relatively high tariffs and taxes to discourage their purchase. Industrial development policies can support related industries, such as government or NGO loans to help establish local bicycle and cart manufacturing, assembling and retail businesses. This is particularly appropriate in developing countries.
Most comprehensive market reforms require federal or state/provincial legislation. Some tax reforms (such as tighter controls over personal use of business vehicles) can be implemented by government agency administrative action. Parking Pricing and Road Pricing can be implemented at the local or regional level. Parking Pricing, Parking Cash Out and Distance-Based Insurance can be implemented by businesses.
Travel impacts depend on which reforms are implemented, how they are implemented, their magnitude, whether there are other supportive public policies, and over what time period (Transport Elasticities). Travel impacts are greatest if reforms are predictable and gradual, and if they are supported by other transportation and land use reforms that improve Accessibility and Transportation Options. PETS (2000) describes several modeling exercises to estimate the effects of more optimal pricing on travel behavior.
Potential travel reductions are large. For example, a set of state-level tax and pricing shifts are predicted to reduce total vehicle travel in Washington State by 15-35% (Litman, Komanoff and Howell, 1998). One study estimates that company car tax reform in the UK alone could reduce total car use by 2.4% (IEEP, 1999). Total motor vehicle travel is predicted to decline by 20-50% in an optimal transportation market that incorporates all cost effective market reforms (ICF, 1997; Litman, 2005).
Table 2 Travel Impact Summary
|
Travel Impact |
Rating |
Comments |
|
Reduces total traffic. |
2 |
Creates a more efficient transport system. |
|
Reduces peak period traffic. |
2 |
" |
|
Shifts peak to off-peak periods. |
2 |
" |
|
Shifts automobile travel to alternative modes. |
2 |
" |
|
Improves access, reduces the need for travel. |
2 |
" |
|
Increased ridesharing. |
2 |
" |
|
Increased public transit. |
2 |
" |
|
Increased cycling. |
2 |
" |
|
Increased walking. |
2 |
" |
|
Increased Telework. |
2 |
" |
|
Reduced freight traffic. |
2 |
" |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Transportation Market Reforms can provide a wide range of transportation benefits, including reduced traffic congestion, road and parking facility cost savings, reduced crashes, increased travel choice, consumer savings, environmental protection and more efficient land use, depending on the type of pricing and other factors (Pricing Evaluation).
The total inefficiency and harm of these market distortions is far greater than most analyses indicate because their impacts are cumulative and synergistic (total impacts are greater than the sum of individual impacts). For example, underpriced parking not only increases parking costs, by increasing total vehicle ownership and use it also increases traffic congestion, accidents, pollution emissions and sprawl compared with what would occur with efficient pricing, while underpricing road use, by increasing vehicle trips, increases parking costs. Underpricing increases automobile dependency and reduces travel options, which is unfair to non-drivers and reduces transport system efficiency. Underpricing encourages automobile use for trips when alternatives are more efficient overall. Put differently, correcting pricing distortions provides multiple benefits.
To the degree that such reforms reflect Market Principles they can increase economic productivity, development and competitiveness (Economic Development). Tax shifting encourages efficiency and technological innovation, reduces the economic costs of imported petroleum, and encourages employment and investment.
The petroleum industry argues that tax shifts are economically harmful (Wiese and Tierney, 1996), but their analysis ignores potential economic benefits from more efficient resource use and reductions in more economically harmful taxes. Studies that incorporate these effects indicate that revenue neutral tax shifts could increase economic development (Walz, et al. 1999; EEA 2000). One study found that increasing fuel taxes and using the revenues to replace income taxes could increase GDP by 7.7% and average household wealth by 5.5%, while reducing fossil-fuel use by 38% (Norland and Ninassi, 1998). A major UK Treasury study estimates that a 5% reduction in travel time for all business travel on the road network would generate savings equivalent to approximately 0.2% of GDP (Eddington, 2006). Other studies indicate that policies that reduce automobile dependence tend to increase economic development (Litman and Laube, 1999). Some Market Reforms increase Affordability by allowing consumers new opportunities to save money when they reduce their vehicle ownership and use.
Costs may include transition costs (the costs of changing to accommodate change) and increased transaction costs (costs of collecting fees and enforcing regulations). These costs can be minimized by using efficient Pricing Methods and making changes predictable and gradual. Impacts on Transportation Choice are mixed and vary depending on how Price Reforms are implemented. Although they make driving more expensive, they tend to increase support for alternative modes, particularly if implemented in conjunction with other strategies to improve transportation choices.
Table 2 Benefit Summary
|
Objective |
Rating |
Comments |
|
Congestion Reduction |
3 |
Particularly if reforms include congestion and parking pricing. |
|
Road & Parking Savings |
3 |
Encourages more efficient use of transportation facilities. |
|
Consumer Savings |
1 |
Consumers save overall if they receive tax revenues and savings. |
|
Transport Choice |
2 |
Increase driving costs, but increases support for alternative modes. |
|
Road Safety |
3 |
Most reforms increase safety by reducing total traffic. Distance-based insurance is particularly effective at increasing road safety. |
|
Environmental Protection |
3 |
Particularly if emission fees are included. |
|
Efficient Land Use |
3 |
Reduces automobile travel, makes urban locations more attractive. |
|
Community Livability |
3 |
Reduces automobile traffic and impacts. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Equity impacts vary depending on what reforms are implemented, the quality of travel choices that are available, and how revenues are used. To the degree that price reforms correct market distortions and internalize external costs, they increase horizontal equity by having consumers pay more of the costs they impose on society. However, price changes tend to affect some groups more than others, which are often a major obstacle to Transportation Market Reforms.
Tax and price increases are often criticized for being regressive with respect to income, but most are no more regressive than other taxes and fees, and they can be progressive is revenues are used to benefit lower-income people (Pricing Evaluation). Some price reforms, such as Pay-As-You-Drive Insurance and Parking Cash Out, are progressive with respect to income. Most Price Reforms benefit transportation disadvantaged people (non-drivers) by reducing the indirect Vehicle Costs they bear, and by improving transportation alternatives. Some Price Reforms improve Basic Access by giving priority to HOV, freight, and other higher-value vehicle trips. Ryan and Stinson (2002) evaluate the distributional impacts of revenue-neutral tax shifts, with higher fuel taxes or mileage fees matched with reductions in general taxes now used to subsidize roads.
Table 3 Equity Summary
|
Criteria |
Rating |
Comments |
|
Treats everybody equally. |
0 |
Mixed. Depends on details. |
|
Individuals bear the costs they impose. |
3 |
Tends to reflect “user pay”. |
|
Progressive with respect to income. |
0 |
Mixed. Depends on details and use of revenue. |
|
Benefits transportation disadvantaged. |
3 |
Tends to reduce costs and increase travel choice for non-drivers. |
|
Improves basic mobility. |
2 |
Discourages lower-value trips without restricting higher-value trips. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Market Reforms can be appropriate in just about any geographic condition although their benefits tend to be greatest where markets are highly distorted, and in urban areas where the problems associated with motor vehicle traffic are greatest. Most reform strategies are implemented by federal or state/provincial governments, although local governments, businesses and campuses can implement Parking Pricing reforms.
Table 4 Application Summary
|
Geographic |
Rating |
Organization |
Rating |
|
Large urban region. |
3 |
Federal government. |
3 |
|
High-density, urban. |
3 |
State/provincial government. |
3 |
|
Medium-density, urban/suburban. |
2 |
Regional government. |
2 |
|
Town. |
1 |
Municipal/local government. |
1 |
|
Low-density, rural. |
1 |
Business Associations/TMA. |
1 |
|
Commercial center. |
2 |
Individual business. |
1 |
|
Residential neighborhood. |
2 |
Developer. |
0 |
|
Resort/recreation area. |
2 |
Neighborhood association. |
0 |
|
|
|
Campus. |
1 |
Ratings range from 0 (not appropriate) to 3 (very appropriate).
Policy Reform
Market Reforms support and are supported by most other TDM strategies. Several TDM pricing strategies can be considered transportation market reforms, including Increased Fuel Taxes, Distance-Based Fees, Road Pricing and Parking Pricing. Institutional Reforms can help implement Market Reforms.
Market Reform supporters can include economists, environmentalists, transportation professionals, and representatives of energy-efficient industries. Opponents include the automobile, petroleum and highway industries.
There tends to be political opposition to tax increases, and institutional resistance to other types of price reform. Opponents often claim that tax shifting is really a hidden form of tax increase (i.e., vehicle taxes will increase, but there will be no comparable reduction in other taxes). Comprehensive market reforms tend to require education of decision-makers and citizens, broad coalitions of support, and the right opportunities.
· Price reforms should be predictable and gradual to allow markets to adjust.
· A variety of price reforms should be considered.
· Price reforms should be selected to provide multiple benefits, including economic development, transportation improvements, environmental protection and increased equity.
· Price reforms should explicitly address equity issues, if necessary, by using revenues in ways that benefit disadvantaged populations, and by providing adequate transport choices so consumers have good alternatives to automobile travel.
· Price reforms should be implemented with improved travel choices, so travelers can choose alternative modes to avoid price increases.
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Looking sternly down from the bench, a judge asked the elderly defendant why, after seven blameless decades she had turned to a life of crime. “Your honor,” she explained, “I began working on my memoirs and they were just too boring.” |
The City of Austin, Texas has an innovative way of financing transportation infrastructure which rewards households that reduce their vehicle ownership. City utility bills include a “Transportation User Fee” (TUF) which averages $30 to $40 (US) annually for a typical household (City of Austin Code 14-10). This charge is based on the average number of daily motor vehicle trips made per property, reflecting its size and use. For example, single-family development is estimated to generate 40 motor vehicle trips per acre per day, condominium residential use and townhouse residential use generate approximately 60 motor vehicle trips per acre per day, and offices generate approximately 180 motor vehicle trips per acre per day. The city provides exemptions to residential properties with occupants that do not own or regularly use a private motor vehicle for transportation, or if the user is 65 years of age or older.
The Puget Sound Regional Council provides information on various financial incentives and regulations to support Smart Growth land use development, and examples of successful developments that reflect Smart Growth principles. The financial incentives and regulations they recommend include:
· Modify zoning and development regulations.
· Tailor regulatory mechanisms to the station area.
· Simplify the Permit Review Process.
· Tax Increment Financing.
· Tax Incentive Zones for Transit.
· Multi-Family Tax Abatement.
· Location Efficient Mortgages.
British Columbia’s 2008 budget includes the first revenue neutral carbon tax in North America (Litman, 2008). It starts 1 July 2008 at $10 per tonne of carbon in 2008, and increases $5 per tonne annually for at least four years. Table 6 illustrates tax rates for various fuels. Revenues are returned to individuals and businesses through various tax cuts and rebates, including a $100 per resident Climate Action Dividend distributed June 2008, and special rebates for low income households.
Table 5 British Columbia Carbon Tax Rates For Various Fuels
|
Fuel |
Unit |
2008 |
2009 |
2010 |
2011 |
2012 |
|
Carbon |
Tonne of Carbon |
$10 |
$15 |
$20 |
$25 |
$30 |
|
Regular Gasoline |
cents/liter |
2.33¢ |
3.50¢ |
4.66¢ |
5.83¢ |
6.99¢ |
|
Diesel |
cents/liter |
2.69¢ |
4.04¢ |
5.38¢ |
6.73¢ |
8.07¢ |
|
Jet fuel |
cents/liter |
2.61¢ |
3.92¢ |
5.22¢ |
6.53¢ |
7.83¢ |
|
Propane |
cents/liter |
1.54¢ |
2.31¢ |
3.08¢ |
3.85¢ |
4.62¢ |
|
Natural gas |
dollars/gigajoules |
$0.50 |
$0.74 |
$0.99 |
$1.24 |
$1.49 |
|
Coal – low heat |
dollars/tonne |
$17.77 |
$26.66 |
$35.54 |
$44.43 |
$53.31 |
|
Coal – high heat |
dollars/tonne |
$20.77 |
$31.16 |
$41.54 |
$51.93 |
$62.31 |
This table shows British Columbia’s carbon tax rates for various fuels.
The European Consultative Forum (ECF) on Environment and Sustainable Development, formed in 1993 to advise the European Commission, released a position paper on Europe’s efforts to pass an EU-wide minimum tax on energy products. Arguing that there is a lack of conformity between official declarations of the EC and actual action being taken, the ECF’s paper encourages the substantial increase in the use of economic instruments in European environmental policy. As a first step, it urges the adoption of the EC’s proposal for a directive on energy taxation, and the removal of existing subsidies to fossil fuel.
The ECF is concerned about the anti-competitive nature of energy taxes, and proposes marginal incentives to improve environmental performance of companies. These incentives could include: voluntary agreements by industry and other sectors to reduce emissions as a prerequisite for tax exemption; licenses combined with full tax on emissions above a permitted level; a tradable emission permit regime with initial allocation of permits to industry free of charge; and a revenue neutral carbon tax where the money is re-circulated on the basis of “non-arbitrary criterion.” ECF believes that energy tax harmonization in Europe should eventually extend to its major trading partners. (Environmental News Daily, May 19, 2000; Statement adopted by the European Forum on the Environment and Sustainable Development at its plenary meeting in Brussels on 4 February 2000.)
This report by the United Nations Environment Programme report, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, advocates economic development policies that increase resource efficiency and reduce pollution emissions. This will require a fundamental shift in investment patterns, based on avoid-shift-improve principles, which include reducing trips through integrated transport and land use planning, shifting to more efficient modes of transport like public and non-motorized modes, and improving vehicles and fuels to reduce urban air pollution and emissions. This research indicates that investment in public transit and greener vehicles generates significant economic returns as well as improving economic opportunity.
The central goal of the Dutch National Environment Plan (NEPP) is to decouple economic growth from the growth in fuel consumption and the use of non-renewable resources. In passenger transport the Dutch are successfully constraining the growth in car use and ensuring that an average of 28% of all passenger transport trips are made by bicycle with that increasing to 34% of trips by 2010. As a result, greenhouse gas emissions from the car fleet are declining.
The Plan includes the following price reforms:
1. A “green” tax system, based on a shift from the taxation of labour to the taxation of environmentally harmful activities. Direct taxation of wages and incomes will be reduced while taxes on consumption will be increased. (Depending on the environmental implications of that consumption).
2. Increase in fuel tax rates (1995); increase the variable component of motoring costs by increasing excise duty on motor fuels (1997).
3. Value-added tax incentives for employers to provide bicycles (1996). Reimbursement of cycle commuting costs in wages and income tax (1997)
4. Increase in scope and magnitude of the tax allowance for trip to work travel costs by means of public transport and the tax free reimbursement of public transport costs in wages and income tax (1997); increased allowance (1998)
5. Freeze on car commuting tax allowance (1997).
6. Incentives for teleworking in wages and income tax (1997) increased concessions (1998).
7. Widening and simplification of wages and income tax concessions for car pooling (1998).
8. The government is studying the scope for incorporating an environmental component in the excise levied on new vehicles and the annual vehicle tax so as to provide incentives for the purchase of clean, energy-efficient cars, and to optimize the fuel mix.
The study Road Relief; Tax and Pricing Shifts for a Fairer, Cleaner, and Less Congested Transportation System in Washington State evaluated the feasibility and impacts of implementing some market reforms in Washington State. Nineteen potential price reforms were considered, including fuel tax increases, per-mile fees, and user-paid parking. These price changes were evaluated in terms of various economic, social and environmental objectives. Three packages of reforms that could be implemented at the state level were considered, and their impacts on vehicle travel, congestion, pollution, consumer costs and tax revenue were considered. The impacts on the region’s economic activity and employment were considered. The results suggest that substantial (15-35%) reductions in vehicle travel and related problems could be achieved while increasing regional economic development.
In light of rising petrol prices, advocacy groups in Kenya and Tanzania are changing the public perception of the bicycle as vital tool for development, and convincing their governments to make bicycles less costly. Kenya recently eliminated the import tariff on bicycles, and Tanzania reduced the duty on bicycle tires. When Ghana eliminated its tariff on the importation of bikes, bike imports skyrocketed 1,000%.
On June 13th, 2002, the Kenyan government announced the elimination of bicycle import duties. The decision comes on the heels of a rise in petrol prices, and should give a significant boost to bike sales and use. The International Technology Development Group (ITDG) in Kenya was a key force behind the decision.
The lower bike prices will enable more widespread bike ownership, among commuters and bike taxi operators, many of whom are currently renting bicycles. Some existing bike taxi operators complain that the low price of bikes will lead to an influx of taxi operators, creating too much competition to maintain previous incomes. Others say that this fear is unfounded, due to the rising petrol prices that will create more demand for bike taxis.
By contrast, the Tanzanian government has yet to remove bicycle import duties (20% VAT and 25% Import Duty), although they have recently reduced the duty on bicycle tires by 10%. While tires comprise only 1/6 of the price of a new bike, they are the most expensive part that needs routine replacement, so it will be more affordable for people to keep their bikes on the road. In a country where the average price of a bike is Tanzania Shs 60,000 and the per capita income is Tanzania Shs 270,000 per annum (a bicycle costs about 22% of average annual income), this is an important first step.
The Association for the Advancement of Low-Cost Mobility, (AALOCOM), the organization that lobbied for the reduction, is taking their campaign farther, hoping to convince the government to follow Kenya's lead and reduce the duty on the entire bike. Leon Mlambo of AALOCOM said, "…for AALOCOM it was an important first step in its campaign to make Low Cost Mobility more affordable."
The benefits reducing or eliminating the tax are numerous. With access to this low-cost transportation, villagers can take grain to the market in larger quantity and more quickly; children in rural areas can reduce their travel time to school by hours; traditionally disadvantaged groups, such as women, can increase their access to self-employment opportunities. In short, the benefits of the reduction or elimination of the import duty are significant.
The Oregon Office of Energy offers the Business Energy Tax Credit to those who invest in energy conservation, recycling, renewable energy resources and less-polluting transportation fuels. Projects that reduce employee commuting or work-related travel and investments in cleaner-burning transportation fuels may qualify for a tax credit. Projects must reduce work-related travel by 25 percent to be eligible. To date, more than 5,500 Oregon energy tax credits have been awarded (see website for a list of case studies). Altogether, those investments save or generate energy worth about $100 million a year.
The tax credit is 35 percent of the eligible project costs - the incremental cost of the system or equipment that's beyond standard practice. You take the credit over five years: 10 percent in the first and second years and 5 percent each year thereafter. If you can't take the full tax credit each year, you can carry the unused credit forward up to eight years. Those with eligible project costs of $20,000 or less may take the tax credit in one year.
SPECTRUM is a project funded by the EU as part of Fifth Framework Programme. The main objective of the SPECTRUM project is to: “develop a theoretically sound framework for defining combinations of economic instruments, regulatory and physical measures in reaching the broad aims set by transport and other relevant policies” in terms of efficiency and equity. As there is a tension between managing the transport system in such a way as to minimise social costs and simultaneously managing the system to meet increased demand, the work of SPECTRUM will address this problem by looking at the potential effects of using either individual instruments, complementary packages of instruments, or the consequences of substituting instruments, in managing the transport system.
A Swedish government-appointed Committee on Climate Change proposed several measures to address the problem of global warming. Among the proposals were:
· Introduction of an emissions-based car tax.
· Phase-out the three industrial gases addressed in the Kyoto Protocol (hydroflourocarbons, perflourocarbons and sulphur hexafluoride).
· Investment in local climate change programs run by municipalities.
· Require all central government authorities to plan to reduce greenhouse gas reductions and conserve more energy.
· Develop a public information campaign to educate the public on linkages between lifestyle changes and climate change issues.
· Expansion of existing wind energy subsidies to expand wind energy generation from its current level of 0.1 to 0.2 terawatt per hour (TWh) to 3 to 5 TWh.
The Committee also proposed that the government prepare for a global greenhouse gas emissions trading scheme and suggested that trading could include carbon dioxide emissions from transportation and buildings. The focus of the emissions trading debate in the European Union (EU) is on industrial emissions and excludes transportation and the building industry. However, Sweden wants to exclude heavy industrial processes so as to not negatively affect competition with the US. Under current law, Sweden taxes carbon dioxide at euros 0.046 (~$0.04) per kilo of carbon dioxide derived from fossil fuel, but industry pays only half of the tax, and energy intensive plants have a maximum tax limit. The carbon dioxide tax is not levied on industrial processes. The Committee suggested that the tax system on carbon dioxide remain intact until 2005, when emissions trading are expected to come into effect at the EU level, upon which the Swedish carbon dioxide taxes could be reviewed. If the EU-wide system is not in place by 2005, the Committee proposed a trading regime with only some of the EU member states.
The Committee’s proposals would cost an estimated euros 1.4 billion (~$1. 3 billion). Sweden has established the goal of reducing its greenhouse gas emissions to 1990 levels in five years, further reducing them by 2% in 10 years, and halving them in 50 years. The Swedish government is scheduled to come to a decision on the Committee’s proposals in autumn of 2000. (Swedenvironment, No. 3, June 2000, on the web at:
www.environ.se:8083/swedenvironment/no0003/0003.html#art6).
In the city of Milwaukee in 1991, automobile use receives a total subsidy estimated to average $426 per vehicle (road construction and maintenance, 30% of policing costs, street lighting, stormwater management, air pollution and additional land consumption), equivalent to three-quarters of the total city property tax levy. The researcher argues that it is more fair and efficient to charge these costs directly to vehicle owners, which would allow property taxes on a $50,000 house to be reduced by approximately $500. Such as shift would result in-less pollution, less congestion and less sprawl, and a more efficient local transportation system.
Local governments are changing the ways that they finance streets and roads. As the motor fuel tax becomes less productive, states and the U.S. federal government have been devolving the responsibility for financing roadways to local governments, which in turn have relied on general fund revenue and have increasingly adopted local option taxes. Generally, these local taxes have no direct relationship to actual road use and thus tend to be inequitable and inefficient. Without policy innovations, the dependence on non-use-related financing of local roads will increase as new vehicle propulsion systems such as electric hybrids and hydrogen fuel cells penetrate the market. Several possible policy directions to increase the role of direct road user charges are evaluated. A mileage-based user charge is found to have considerable potential both as a financing mechanism and as a means for implementing road pricing. Among the policies that can be supported are congestion pricing, privately operated tollways, use of environmentally friendly vehicles, and improved travel demand analyses. Above all, more of the financing burden for local roads can be shifted from those paying property and sales taxes to actual users of the roads within a community.
Current transportation investment practices favor tend to favor automobile and air travel over more resource efficient modes. BankWatch has identified various planning and investment reforms that would result in more cost-effective infrastructure development, and help create more integrated and efficient transportation systems.
A detailed study for the Australian Treasury of potential tax reforms to improve economic efficiency recommends shifting from fixed taxes on vehicle purchases and registration fees to distance-based and congestion-based road user fees. It assumes that, “Transport-specific taxes should only be imposed where they improve the way that people, businesses and governments make decisions. In general, this means that transport taxes should be designed to correct market failures in the transport sector — specifically, to ensure that users of transport make decisions based on the full costs of their activities on the community (including unpriced costs that spill over to others and the cost of consuming infrastructure).” The analysis concludes:
Current road tax arrangements will not meet Australia's future transport challenges. Poorly functioning road networks harm the amenity, sustainability, liveability and productivity of society. Moving from indiscriminate taxes to efficient prices would allow Australia to leverage the value of its existing transport infrastructure. Less congested roads, shorter travel times and investment in road infrastructure that addresses user demand would provide a foundation for further productivity growth, improved living standards and more sustainable cities.
In major cities, location-specific congestion charges would vary according to the time of day. City roads would be less congested during peak periods, with higher travel speeds and shorter travel times saving time for road users, reducing vehicle costs and reducing greenhouse emissions. The revenue from congestion charges on existing roads should flow back to the community, initially to finance public transport in affected areas.
Heavy vehicle charging would ensure that individual trucking operators pay their own specific costs and no longer cross-subsidise other operators. Truck operators would have incentives to avoid route choices and vehicle configurations that cause the highest costs, but would have access to roads and bridges where and when they are willing to pay. Revenue from road-wear charges would directly fund road maintenance.
Negative spillovers not currently amenable to pricing would be addressed through regulations. The transport sector would pay for greenhouse emissions through an economy-wide scheme, not through ad hoc sector-specific taxes.
In exchange for targeted charges, road users would pay less tax, including less fuel tax. Motor vehicle stamp duties would be abolished, compulsory third party insurance would be fairly priced, and taxi licence quantity restrictions that push up taxi fares would be removed.
The revenue from efficient charges could help finance new urban transport infrastructure, and cover the cost of heavy vehicle damage. But these charges would not pay for the full cost of providing and operating the road network. The remaining costs could be funded from general tax revenue, or by retaining a network access charge (such as annual vehicle registration) or a variable charge (such as fuel tax) set to recover the efficient costs of road provision. Important non-economic community objectives would still be funded from general revenue through well-defined community service obligations.
Spending on roads should match anticipated need. This should be determined strategically according to comprehensive and transparent benefit-cost analysis. This would help ensure new roads are built where needed, and roads are maintained to minimise total life-cycle costs, including costs to road users. Road users with specific needs could enter commercial agreements with road suppliers.
Existing institutions have not led to the most efficient use and supply of roads. Prices are essential to making the best use of roads, but they must be coupled with improved governance that better serves the needs of road users, now and in the future. New investment based on economic criteria, and accountability for investment decisions would help ensure that roads are in place to address future needs.
The challenge is formidable. It requires coordination across all levels of government. But reform would promote the best investment in and use of our roads, lift national productivity, and improve the lives of millions of Australians.
The 2004 U.S. Federal Highway Administration’s Conditions and Performance “needs” report estimated that approximately $78.8 billion annually (constant dollars) would be needed to preserve the Interstate Highway System. Optimal congestion pricing would reduce the costs of achieving the same performance to $57.2 billion by reducing peak-period traffic volumes. If the $24.0 billion in estimated annual congestion pricing revenues were dedicated to highway and bridge construction and maintenance, the need for other funding (such as fuel taxes or general revenue) would decline to $23.2 billion, saving approximately a trillion dollars over the 20-year planning period.
Larry Sandler, Milwaukee Journal Sentinel, (www2.jsonline.com/news/metro/nov99/hiway30112999a.asp), Nov. 29, 1999
Instead of building more highways, Wisconsin could pay people to drive less, a state Department of Natural Resources official said Monday. The DNR has asked the state Department of Transportation to consider sending gas tax rebate checks of up to $2,800 a year to residents who voluntarily limit their driving. That could help reduce the environmental damage from highway expansion, said Michael Neuman, a DNR specialist on transportation and the environment. "I think it's the only answer to solving this nightmare of highway congestion we have in this country," Neuman said.
But key legislators of both parties and a DOT official immediately voiced skepticism about the concept, which apparently would be the first of its kind in the nation. They said the rebate plan would cost too much and wouldn't make a difference in how much people drive.
"The DNR hasn't considered any of the downsides of doing it," said Ernie Wittwer, DOT investment management administrator. "They just tossed another idea out at the 12th hour."
Neuman said the rebates could cost as much as $800 million a year but would be balanced by an equal cut in highway spending. If people didn't reduce their driving, the state wouldn't pay that much, he said.
The rebate idea is part of a broader assault on the $20 billion long-range highway plan. Over the next 20 years, the plan calls for adding 2,800 miles of highway lanes and 34 bypasses, using 25,000 acres. NR Secretary George Meyer has said that this much highway expansion could threaten air, water, land and wildlife. At the same time, a coalition of local governments, environmentalists and transit activists declared Monday that the highway plan should be rewritten to consider alternatives to highway expansion, and to place a higher priority on maintaining state and local roads instead of building state highways.
The DOT has touted its highway plan as a balanced proposal that assumes train and bus service would be increased. But critics said that rail lines, bus systems and local streets would suffer, because the highway expansion would cost $4.2 billion more than gas taxes and license fees can cover at current rates. Neuman suggested the rebate concept in his critique of the DOT plan. According to the DNR comments, still in draft form, the DOT should study such rebates and other incentives, among them higher parking fees, to persuade people to drive less and to reduce the need for more highways.
Drivers who want the rebates would agree to bring their cars to a Division of Motor Vehicles office once a year and let state employees check their odometers. They would pay a $30-a-year fee to cover the cost of administering the program. Checks would be based on the vehicle miles traveled and the number of drivers, other people and cars in each household. For example, a family of two drivers and three children could earn a $1,200 rebate by driving less than 10,000 miles a year. Households without cars could qualify for the maximum $2,800 rebate by filling out a form and paying a $10 fee.
Andrea Broaddus, campaign director of the New Transportation Alliance, praised the rebate as a "really innovative" idea that would pump more money into the consumer economy instead of into costly highways. But Rep. David Brandemuehl (R-Fennimore), chairman of the Assembly Highways and Transportation Committee, said people wouldn't turn from driving to public transit as long as gas is "relatively cheap."
Brandemuehl said the state must continue to support highways until it can build a far more extensive network of passenger and freight rail lines. Residents wouldn't stand for letting highways deteriorate, he said. Even Sen. Brian Burke (D-Milwaukee), a critic of the highway plan, called the rebates "an idea whose time hasn't come."
Burke, co-chairman of the Joint Finance Committee in the Legislature, said, "We have to focus on smart growth and better transportation planning and more travel options and voluntary measures before throwing money at a proposal such as this."
Still, Meyer said Monday that he is negotiating directly with Transportation Secretary Charles Thompson and his top deputy to bring more environmental sensitivity to the highway plan.
In a letter to Thompson earlier this year, Meyer said he was particularly concerned that the plan "accepts increased vehicular travel as a given and accommodates it through increased highway capacity."
Meyer said the DOT hasn't addressed his concerns. Wittwer disagreed, saying the DOT has thoroughly considered the environmental impact of its plan. And although the DOT hasn't studied the rebate idea, it did ask the Southeastern Wisconsin Regional Planning Commission to examine 15 or 20 other ways to encourage people to drive less, Wittwer said. None of those ideas would have significantly reduced driving, the study found. Nor has driving been reduced because of rising gas prices or higher vehicle registration fees in other states, Wittwer said.
The Dutch government is phasing out the current vehicle tax (Motorrijtuigenbelasting or MRB) and vehicle sales tax (Belasting Personenauto’s en Motoren or BPM) and replacing them with a per-kilometre fee to finance roadway infrastructure. Motorists who drive less will pay less, and those who drive more will pay more. Cars that pollute more will be more expensive than cleaner cars. Total government revenues will not increase. This is considered fairer and more efficient than the current system, which imposes very high vehicle ownership taxes. The program is therefore deliberately named “a Different Way of Paying for Mobility.” Implementation is planned for 2011.
Eventually, each vehicle will be fitted with a mobimeter that will record the number of kilometres driven and the charge payable (www.minvenw.nl/cend/dco/home/data/international/gb/eng1201.html). An open standard will be used, so the private sector can play an important role and incorporate ancillary services such as travel information, automatic breakdown notification and payment for parking. A public/private platform is to be set up in order to develop such services.
A national climate change strategy unveiled November 2000 by Irish environment minister Noel Dempsey commits to phased-in revenue-neutral carbon taxation starting in 2002. The carbon taxes would be enacted in concert with participation in EU and international emissions trading. The transport and energy production sectors would probably achieve the largest reductions in emissions from a carbon tax and help the country meet its Kyoto protocol target. Other policies to reduce emissions from the residential, buildings, and agricultural sectors are also included in the plan. Although the group Earth Watch Ireland was pleased with the plan, the Irish Business and Employers Confederation insists that the carbon taxes would damage the economy.
A study by World Bank economist Benoît Bosquet finds that ecological tax reform delivers what is called a “double dividend,” benefits both to the economy and the environment. In “Environmental Tax Reform: Does It Work? A Survey of the Empirical Evidence,” (Ecological Economics Vol. 34, 2000, pp. 19-32). Bosquet studied 139 computer simulations from 56 studies of ecological tax reforms, mostly in Europe and most of which shifted taxes onto energy while shifting them off labor. The economic simulations showed that reductions in carbon emissions would result in improvements of environmental quality as well as marginal gains in employment levels. The simulations also showed both gains and losses in certain economic activity, losses in investment and a “moderate increase” in prices. The impacts of environmental tax shifting depend on country specific factors and on the specific design of each tax-shifting plan. He noted, for instance, that literature suggests that using tax revenue from environmental taxes to reduce non-labor costs such as social security would result in higher employment benefits compared to using the revenue to reduce personal income taxes. If the revenue is used to reduce social security costs on low-income taxpayers, some studies indicate, the benefits are even higher. The time scale of the implementation of a tax-shifting plan also would affect its success, Bosquet found.
In cover stories focusing on world dependence on Middle Eastern oil, The Economist cites environmental tax reform as a route to greater energy security in the U.S. Its Leaders editorial argues that the U.S. does not tax gasoline enough. According to the column, what is needed is a long-term plan to shift taxes from incomes to emissions of carbon. This would spur development of new transport technologies that are vital in curbing the demand for oil. In its story “A Dangerous Addiction,” the magazine says the best way to promote the development of alternative fuels and new technologies is through taxation that reflects the energy security risk (as well as dangers to health and the environment) of burning oil. Europe recognizes this, and over the past decade has started to shift the burden of taxation from income to, for example, carbon emissions. (The Economist (www.economist.com/search), December 15, 2001, pp. 9 and 16).
Ashden Trust (1997), Company Car Taxation: A Contribution to the Debate, Ashden Trust (www.ashdendirectory.org.uk).
Australian Treasury (2009), Australia’s Future Tax System, Report to the Treasurer (http://taxreview.treasury.gov.au); at http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/Papers/Final_Report_Part_2/chapter_e3.htm.
Ted Balaker and Sam Staley (2006), The Road More Traveled: Why the Congestion Crisis Matters More Than You Think And What We Can Do About It, Rowman & Littlefield; summary at www.reason.org/road.
Edward Beimborn and Robert Puentes (2003), Highways and Transit: Leveling the Playing Field in Federal Transportation Policy, Brookings Institute (www.brookings.edu).
Benoît Bosquet (2000), “Environmental Tax Reform: Does It Work? - A Survey of the Empirical Evidence,” Ecological Economics, Vol. 34, 19-32.
Bill Bradley, Tom Ridge and David Walker (2011), Road To Recovery: Transforming America’s Transportation, Carnegie Endowment for International Peace (www.carnegieendowment.org); at http://carnegieendowment.org/2011/07/11/road-to-recovery-transforming-america-s-transportation/3e1h.
Andrea Broaddus, Todd Litman and Gopinath Menon (2009), Training Document On Transportation Demand Management, Sustainable Urban Transport Project (www.sutp.org) and GTZ (www.gtz.de).
BTRE (2002), Greenhouse Policy Options for Transport, Bureau of Transport and Regional Economics (www.btre.gov.au).
Sally Cairns, et al (2004), Smarter Choices - Changing the Way We Travel, UK Department for Transport (www.dft.gov.uk). This comprehensive study provides detailed evaluation of the potential travel impacts and costs of various mobility management strategies. Includes numerous case studies.
The Carbon Trader (www.thecarbontrader.com) is an independent organization that provides information and commercial services for the Carbon Credit Market.
CE Delft (2012), Member States in Top Gear: Opportunities for National Policies to Reduce GHG Emissions in Transport, CE Delft (www.cedelft.eu) for the RLI, Council for the Environment and Infrastructure; at www.cedelft.eu/publicatie/member_states_in_top_gear/1280.
CEE (2007), Lost in Transportation: The European Investment Bank’s Bias Towards Road and Air Transport, BankWatch Network (http://bankwatch.org/documents/lost_in_transport.pdf).
Center for a Sustainable Economy (www.sustainableeconomy.org) publishes Tax News Update, a free weekly electronic newsletter that reports on environment-related tax news at the local, state, federal, and international levels. The TNU tracks legislative activity, reviews publications, and monitors innovations related to tax measures affecting the environment.
CFIT (2002), Paying For Road Use, Oscar Farber, Commission for Integrated Transport (www.cfit.gov.uk/reports/pfru/index.htm).
Harry Clarke and David Prentice (2009), A Conceptual Framework For The Reform Of Taxes Related To Roads And Transport, School of Economics and Finance, La Trobe University, for the Australia Treasury Australia's Future Tax System review; at http://apo.org.au/research/conceptual-framework-reform-taxes-related-roads-and-transport.
David Coady, et al. (2010), Petroleum Product Subsidies: Costly, Inequitable, and Rising, International Monetary Fund (www.imf.org); at www.imf.org/external/pubs/ft/spn/2010/spn1005.pdf.
Comsis Corporation (1993), Implementing Effective Travel Demand Management Measures: Inventory of Measures and Synthesis of Experience, USDOT and Institute of Transportation Engineers (www.ite.org); at www.bts.gov/ntl/DOCS/474.html.
Keith Crane, Nicholas Burger and Martin Wachs (2011), The Option of an Oil Tax to Fund
Transportation and Infrastructure, Rand Corporation (www.rand.org); at www.rand.org/content/dam/rand/pubs/occasional_papers/2011/RAND_OP320.pdf.
Elizabeth Deakin, Greig Harvey, Randal Pozdena and Geoffrey Yarema (1996), Transportation Pricing Strategies for California: An Assessment of Congestion, Emissions, Energy and Equity Impacts, California Air Resources Board (www.arb.ca.gov/cgi).
Thomas Deen (2003), “Policy Versus the Market: Transportation’s Battleground,” Transportation Research Record 1839, Transportation Research Board (www.trb.org), pp. 5-22.
Jos Dings, Bas Leurs, Andries Hof, D.M. Bakker, P.H. Mijjer and E.T. Verhoef (2002), Returns on Roads: Optimising Road Investments and Usage With 'The User Pays Principle', CE Delft (www.ce.nl/eng/redirect/thema_pricing_index.html).
Stephen J. Dubner (2008), Mixed Messages on Auto Use, Freakonomics; at http://freakonomics.blogs.nytimes.com/2008/05/29/mixed-messages-on-auto-use.
Alan Durning and Yoram Bauman (1998), Tax Shift, Northwest Environment Watch (www.northwestwatch.org).
Earth Track (www.earthtrack.net) is an independent organization that documents energy subsidies and market distortions.
ECMT (2000), Efficient Transport Taxes and Charges, European Conference of Ministers of Transport, OECD (www.sourceoecd.org).
Rod Eddington (2006), The Case For Action: Sir Rod Eddington's Advice to Government- Transport’s Role in Sustaining the UK’s Productivity and Competitiveness, U.K. Treasury, Her Majesty’s Stationary Office (www.hm-treasury.gov.uk); at www.hm-treasury.gov.uk/independent_reviews/eddington_transport_study/eddington_index.cfm.
EEA (2000), Environmental Taxes: Recent Developments in Tools for Integration, Environmental Issues Series No. 18, European Environment Agency (http://org.eea.eu.int).
EEA (2004), Transport Price Signals: Monitoring Changes in European Transport Prices and Charging Policy in the Framework of TERM, Transport and Environment Reporting Mechanism (TERM), European Environment Agency; Technical Report No 3/2004
(http://reports.eea.eu.int/technical_report_2004_3/en/Technical_report_3-2004_web.pdf).
Ethan N. Elkind (2009), Removing The Roadblocks: How to Make Sustainable Development Happen Now, UC Berkeley School of Law’s Center for Law, Energy & the Environment (CLEE) and UCLA School of Law’s Environmental Law Center & Emmett Center on Climate Change and the Environment (www.law.berkeley.edu); at www.law.berkeley.edu/files/Removing_the_Roadblocks_August_2009.pdf.
EPI (2002), Selected Examples of Explicit Environmental Tax Reform Packages, Earth Policy Institute (www.earth-policy.org/Updates/Update14_data.htm).
European Transport Pricing Initiatives (www.transport-pricing.ne) includes various efforts to develop more fair and efficient pricing. Specific European transportation pricing projects are described below:
AFFORD (www.vatt.fi/afford) is an evaluation of optimal transportation pricing policies.
CAPRI (www.its.leeds.ac.uk/projects/capri) is disseminating research on transportation pricing.
CORDIS Project - Transport (www.cordis.lu/cost-transport/src/cost-342.htm) is a major European study of best practice in pricing and land use management policies to improve mobility and address energy and emission problems.
CUPID (Co-ordinating Urban Pricing Integrated Demonstrations), European Transport Pricing Initiative, Project No. GRD1-1999-10958, European Commission, Competitive and Sustainable Growth Programme (www.transport-pricing.net/reports22.html), November, 2001.
ExternE (http://externe.jrc.es) involves research into external costs of transport.
IMPRINT (www.imprint-eu.org) is an effort to promote implementation of fair and efficient transport pricing.
PETS (www.cordis.lu/transport/src/pets.htm) assesses current pricing of transport modes in European Union member countries.
TRACE (www.hcg.nl/projects/trace/trace1.htm) provides costs of private road travel and their effects on demand, including short and long term elasticities. Sponsored by the European Commission, Directorate-General for Transport.
SPRUCTRUM (www.its.leeds.ac.uk/projects/spectrum) (Study of Policies regarding Economic instruments Complementing Transport Regulation and the Undertaking of physical Measures) is a research program to develop a framework for evaluating economic instruments, regulatory and physical measures to help achieve transport efficiency and equity objectives.
TRENEN (www.cordis.lu/transport/src/trenen.htm) is an effort to develop models for transport, environment and energy.
UNITE (www.its.leeds.ac.uk/projects/unite) involves transport cost accounting.
EU (1996), Towards Fair And Efficient Pricing in Transport, Directorate General for Transportation, European Union (http://europa.eu.int).
EWG (2004), Gas Tax Losers: Why Congress Must Insure A Fair Share of Gas Tax Revenues For Urban America, Environmental Working Group (www.ewg.org), March 2004.
Oscar Faber (2000), Fair and Efficient Pricing in Transport - The Role of Charges and Taxes, European Commission DG TREN in association with EC DG TAXUD and EC DG ENV. Available through the European Program for Mobility Management (www.epommweb.org).
FHWA (1997), 1997 Federal Highway Cost Allocation Study, USDOT (www.fhwa.dot.gov).
FHWA, National Dialogue on Transportation Operations (www.ops.fhwa.dot.gov/nat_dialogue.htm), discusses institutional changes needed to implement more efficient transportation.
FHWA (2004), Status of the Nation's Highways, Bridges, and Transit: 2004 Conditions and Performance, Federal Highway Administration (www.fhwa.dot.gov); at www.fhwa.dot.gov/policy/2004cpr/pdfs.htm.
FHWA (2006), Congestion Pricing: A Primer, Office of Transportation Management, Federal Highway Admimistration (www.ops.fhwa.dot.gov); at www.ops.fhwa.dot.gov/publications/congestionpricing/congestionpricing.pdf.
David Forkenbrock (2000), A New Approach to Assessing Road User Charges, University of Iowa Public Policy Center (www.uiowa.edu).
David J. Forkenbrock (2006), “Financing Local Roads: Current Problems and New Paradigm,” Transportation Research Record 1960, TRB (www.trb.org), pp. 8-14.
Stephen Glaister and Dan Graham (2003), Transport Pricing and Investment In England, Imperial Collage London and Independent Transport Commission (www.cts.cv.imperial.ac.uk).
GTZ (2009), International Fuel Prices 2009, Deutsche Gesellschaft für Technische Zusammenarbeit (www.gtz.de); at www.gtz.de/en/themen/29957.htm. This report, the sixth in the series, provides an overview of the retail prices of gasoline and diesel in more than 170 countries, discusses pricing policies, presents case studies on the impact of high and volatile fuel prices in 2007/2008 in developing countries and provides access to numerous additional resources.
Eva Gutiérrez Puigarnau and Jos van Ommeren (2007), Welfare Effects of Distortionary Company Car Taxation through Increased Household Car Ownership, 11th World Conference on Transport Research, Berkeley, California (www.wctrs.org).
Hagler Bailly (1999), Potential for Fuel Taxes to Reduce Greenhouse Gas Emissions from Transport, Transportation Table of the Canadian National Climate Change Process (www.tc.gc.ca/Envaffairs/subgroups1/fuel_tax/study1/final_Report/Final_Report.htm).
Greig Harvey and Elizabeth Deakin (1996), “The STEP Analysis Package: Description and Application Examples,” Appendix B, in USEPA, Technical Methods for Analyzing Pricing Measures to Reduce Transportation Emissions, USEPA Report #231-R-98-006, (www.epa.gov/clariton).
Timothy D. Hau (2001), “Demand-side Measures and Road Pricing” in Modern Transport in Hong Kong for the 21st Century, by Anthony G.O. Yeh, Peter R. Hills and Simon K.W. Ng, eds., The Centre of Urban Planning and Environmental Management, The University of Hong Kong (www.econ.hku.hk/~timhau/demand_side_measures_and_road_pricing.pdf), Chapter 11, pp.127-162. ISBN 962-7589-17-9.
HIPA (2010), Integrating PAYD Insurance and Mileage-based Road User Fees: Workshop On Integrating PAYD Insurance And Mileage-Based Road User Fees, Humphrey Institute of Public Affairs (www.umn.edu); at http://blog.lib.umn.edu/slpp/regionalities/PAYDInsuranceMNWorkshopSummary.pdf. Summarizes 19 April 2010 workshop on integrating pay-as-you-drive (PAYD) insurance and mileage-based road user fees was held at the University of Minnesota’s Humphrey Institute of Public Affairs.
J. Andrew Hoerner and Jan Mutl (2000), Good Business: A Market Analysis of Energy Efficiency Policy, Center for a Sustainable Economy (www.sustainableeconomy.org).
ICF (1997), Opportunities to Improve Air Quality Through Transportation Pricing, Office of Mobile Sources, EPA (www.epa.gov/otaq/market/pricing.pdf).
ICF International with RAND Corporation (2009), Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding, Web-Only Document 143, National Cooperative Highway Research Program (NCHRP), Transportation Research Board (www.trb.org); at http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_w143.pdf.
IEEP (1999), Winners and Losers: Company Car Tax Reform, Institute for European Environmental Policy, Transport 2000 (London).
IMF (2010), Petroleum Product Subsidies: Costly, Inequitable, and Rising, International Monetary Fund (www.imf.org); at www.imf.org/external/pubs/ft/spn/2010/spn1005.pdf.
Olof Johansson and Lee Schipper (1997), “Measuring the Long-Run Fuel Demand for Cars,” Journal of Transport Economics and Policy, Vol. 31, No. 3.
Curtis Johnson (2003), Market Choices and Fair Prices: Research Suggests Surprising Answers to Regional Growth Dilemmas, Center for Transportation Studies, University of Minnesota (www.cts.umn.edu/trg/research/reports/TRG_17.html).
Robert Johnston, Jay Lund and Paul P. Craig (1995) “Capacity-Allocation Methods for Reducing Urban Traffic Congestion,” Journal of Transportation Engineering, Vol. 121, No. 1, January 1995, pp. 27-39.
Per Kågeson and Jos Dings (1999), Electronic Kilometre Charging for Heavy Goods Vehicles in Europe, European Federation for Transport and Environment (www.t-e.nu).
Uwe Kenert and Hartmut Kuhfeld (2007), “Diverse Structure Of Passenger Car Taxation In Europe And The EU Commissions Proposal For Reform,” Transport Policy (www.elsevier.com/locate/transpol), Vol. 14, No. 4, July 2007, pp. 306-316.
Kenneth Kinney (1999), Should Property Taxes Subsidize Automobile Usage, Wisconsin DOT, National Transportation Library, USDOT (http://199.79.179.78/DOCS/kinney.html).
Doug Koplow (2010), G20 Fossil-Fuel Subsidy Phase Out: A Review Of Current Gaps And Needed Changes To Achieve Success, EarthTrack (www.earthtrack.net); at www.earthtrack.net/files/uploaded_files/OCI.ET_.G20FF.FINAL_.pdf.
Damian J. Kulash (2001), “Transportation User Fees in the United States,” Transportation Quarterly, Vol. 55, No. 3 (www.enotrans.com), Summer 2001, pp. 33-49.
Todd Litman (1996), “Using Road Pricing Revenue: Economic Efficiency and Equity Considerations,” Transportation Research Record 1558, TRB (www.trb.org), pp. 24-28, also at www.vtpi.org/revenue.pdf.
Todd Litman (2005), Socially Optimal Transport Pricing and Markets, VTPI (www.vtpi.org); at www.vtpi.org/sotpm.pdf.
Todd Litman (2004), Appropriate Response To Rising Fuel Prices, VTPI (www.vtpi.org); at www.vtpi.org/fuelprice.pdf.
Todd Litman (2006), Parking Taxes: Evaluating Options and Impacts, VTPI (www.vtpi.org/parking_tax.pdf); at www.vtpi.org/parking_tax.pdf.
Todd Litman (2006), “Transportation Market Distortions,” Berkeley Planning Journal: Sustainable Transport in the United States: From Rhetoric to Reality?) Volume 19, 2006, pp. 19-36; at www-dcrp.ced.berkeley.edu/bpj.
Todd Litman (2008), Carbon Taxes: Tax What You Burn, Not What You Earn, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/carbontax.pdf.
Todd Litman (2009), Are Vehicle Travel Reduction Targets Justified? Evaluating Mobility Management Policy Objectives Such As Targets To Reduce VMT And Increase Use Of Alternative Modes, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/vmt_red.pdf.
Todd Litman (2009), Transportation Cost and Benefit Analysis; Techniques, Estimates and Implications, Victoria Transport Policy Institute (www.vtpi.org/tca).
Todd Litman, Charles Komanoff and Douglas Howell (2000), Road Relief; Tax and Pricing Shifts for a Fairer, Cleaner, and Less Congested Transportation System in Washington State, Climate Solutions (www.climatesolutions.org). Also see discussion in Litman (2000), “Transportation Market Reforms for Sustainability,” Transportation Research Record 1702, TRB (www.trb.org), pp. 11-20.
Todd Litman and Felix Laube (1999), Automobile Dependency and Economic Development, VTPI (www.vtpi.org); at www.vtpi.org/ecodev.pdf.
James Luk and Tony Richardson (1997), Company Cars and Management of Travel Demand, Australian Road Research Board (Vermont South).
Ward Lyles (2005), Where Do We Go From Here? Wisconsin Transportation at the Crossroads, 1000 Friends of Wisconsin & The Land Use Institute (www.1kfriends.org/documents/1KFriendslegislat_001.pdf).
Andrew Macbeth and Megan Fowler (2008), Transport Network Optimisation: Think-Piece, New Zealand Transport Agency (http://www.landtransport.govt.nz); at http://www.landtransport.govt.nz/sustainable-transport/docs/transport-network-optimisation.pdf.
A.D. May, A.D and D.S. Milne (2000), “Effects of Alternative Road Pricing Systems on Network Performance,” Transportation Research A, Vol. 34, No. 6, August 2000, pp. 407-436.
Inge Mayers (2000), “The Efficiency Effects of Transport Policies in the Presence of Externalities and Distortionary Taxes,” Journal of Transport Economics & Policy, Vol. 34, Part 2, May 2000, pp. 233-260.
Gerhard Metschies (1999 and 2001), Fuel Prices and Taxation, with Comparative Tables for 160 Countries, German Agency for Technical Cooperation (www.zietlow.com/gtz/fuel.pdf and www.zietlow.com/docs/Fuel%202000.pdf).
Michael Meyer (2001), Measuring System Performance: The Key to Establishing Operations as a Core Agency Mission, National Dialogue on Transportation Operations
(www.ops.fhwa.dot.gov/Speech%20Files/FHWAPerformancemeasures.doc).
Moret, Ernst & Young (1994), Tax Provisions Which Have an Impact on the Environment, Report to the European Commission (Brussels).
James Murphy and Mark Delucchi (1998), “Review of the Literature on the Social Cost of Motor Vehicle Use in the United States, Journal of Transportation and Statistics, Vol. 1, No. 1, Bureau of Transportation Statistics (www.bts.org), Jan. 1998, pp. 15-42.
Norman Myers (1998), Perverse Subsidies; Tax $s Undercutting Our Economies and Environments Alike, International Institute for Sustainable Development (www.iisd.org).
NEPP 3 (1998), National Environment Policy Plan 3, (English Language version 264 pages), Ministry of Housing, Spatial Planning and the Environment, The Netherlands (www.netherlands-embassy.org/c_envnmp.html); printed copies available from the Ministry of Transport and Public Works and Water Management, Directorate general for Passenger Transport, P.O. box 20901, 2500EX The Hague).
Douglas Norland and Kim Ninassi (1998), Price It Right; Energy Pricing and Fundamental Tax Reform, Alliance to Save Energy (www.ase.org).
OECD (2001), Database on Environmentally Related Taxes, Organization for Economic Cooperation and Development (www1.oecd.org/env/policies/taxes/index.htm).
OECD (2002), Road Travel Demand: Meeting the Challenge, Organization for Economic Cooperation and Development (www.oecd.org).
PADIRT (2012), Recognising Salary Trade-Offs As Income: An Officials’ Issues Paper, Policy Advice Division of New Zealand Inland Revenue and the Treasury (http://taxpolicy.ird.govt.nz); at http://taxpolicy.ird.govt.nz/publications/2012-ip-salary-tradeoffs-income/overview.
Ian W. H. Parry and Kenneth A. Small (2004), Does Britain or the United States Have the Right Gasoline Tax?, Resources for the Future; Discussion Paper 02-12 (www.rff.org); at www.rff.org/Documents/RFF-DP-02-12.pdf.
Ian W. H. Parry, Margaret Walls and Winston Harrington (2007), Automobile Externalities and Policies, Discussion Paper 06-26, Resources for the Future (www.rff.org); at www.rff.org/rff/Documents/RFF-DP-06-26-REV.pdf.
Dan Perrin (2000), Options to Reduce Light Duty Vehicle Emissions in British Columbia, Discussion Paper, BC Ministry of Finance and Corporate Relations (Victoria).
PETS (2000), Pricing European Transport Systems; Final Report, Institute of Transport Studies, University of Leeds, European Transport Pricing Initiative (www.Transport-Pricing.Net), funded by the European Commission.
Richard C. Porter (1999), Economics at the Wheel; The Costs of Cars and Drivers, Academic Press (www.hbuk.co.uk/ap).
Stephen Potter and Tom Rye (2000), The Potential for Further Changes to the Personal Taxation Regime to Encourage Modal Shift, Department for Transport, Local Government and the Regions (www.dtlr.gov.uk/itwp/modalshift/index.htm).
PROSPECTS (2003), Transport Strategy: A Decisionmakers Guidebook, Konsult, Institute for Transport Studies, University of Leeds (www.konsult.leeds.ac.uk); at www.konsult.leeds.ac.uk/public/level1/sec00/index.htm.
PTUA (2008), A Tax System For Sustainable Transport: Submission To The Review Of Australia’s Future Tax System, Public Transport Users Association (www.ptua.org.au); at www.ptua.org.au/files/2008/PTUA_tax_review_submission_2008-10-17.pdf.
PTUA (2009), Designing a More Efficient, Equitable and Sustainable Motor Vehicle Tax System: Response to Australia’s Future Tax System Consultation Paper, Public Transport Users Association (www.ptua.org.au); at www.ptua.org.au/files/2009/tax_review_submission_2009_05.pdf.
PSRC (2003), Potential Financial Incentives for Implementing Transit-Oriented Development and Regulations that Support Transit-Oriented Development, Puget Sound Regional Council (www.psrc.org).
Robert Puentes and Ryan Prince (2003), Fueling Transportation Finance: A Primer on the Gas Tax, Center on Urban and Metropolitan Policy, Brookings Institute (www.brookings.edu); at www.brookings.edu/reports/2003/03transportation_puentes.aspx.
RAND Europe (2005), Analysis and Assessment of Policies: Report on Performance of Policies, European Commission (www.summa-eu.org).
RAND (2008), Moving Los Angeles: Short-Term Transportation Policy Options for Improving Transportation, Rand Corporation (www.rand.org); at www.rand.org/pubs/monographs/2008/RAND_MG748.pdf.
Redefining Progress (www.rprogress.org) is an organization that promotes market reforms that incorporate environmental and social values into economic decisions.
Robert Repetto, Roger Dower, Robin Jenkins and Jacqueline Geoghegan (1992), Green Fees: How A Tax Shift Can Work for the Environment and the Economy, World Resources Institute (www.wri.org).
Andrea Ricci, et al (2006), Pricing For (Sustainable) Transport Policies – A State Of The Art, Deliverable 1, Project contract no. 006293, IMPRINT-NET: Implementing pricing reforms in Transport – Networking (http://vplno1.vkw.tu-dresden.de/psycho/download/imprint-net_d1.pdf).
Martin G. Richards (2006), Congestion Charging in London: The Policy And The Politics, Palgrave (www.palgrave.com/products/Catalogue.aspx?is=1403932409).
Harry W. Richardson, editor (2008), Road Congestion Pricing In Europe: Implications for the United States, Edger Elgar (www.e-elgar-environment.com/Bookentry_contents.lasso?id=12789).
Runzheimer (1996), Survey and Analysis of Canadian Business Vehicle Policies & Costs, Runzheimer (www.runzheimer.com/sacbvs.htm).
Barry Ryan and Thomas F. Stinson (2002), Road Finance Alternatives: An Analysis of Metro-Area Road Taxes, Center for Transportation Studies, University of Minnesota
Jan A. Schwaab and Sascha Thielmann (2001), Economic Instruments for Sustainable Road Transport. An overview for Policy Makers in Developing Countries, GTZ (www.gtz.de) and the United Nations Economic and Social Commission for Asia and the Pacific (www.unescap.org); at www.gtz.de/dokumente/Economic_Instruments_for_Sustainable_Road_Transport.pdf.
R.A. Scott, GV Currie, and KJ Tivendale (2012), Company Cars And Fringe Benefit Tax – Understanding The Impacts On Strategic Transport Targets, Booz & Company,
Research Report 474, NZ Transport Agency (www.nzta.govt.nz); at www.nzta.govt.nz/resources/research/reports/474/docs/474.pdf.
SFU (2005), Making Sustainability Happen: Market Mechanisms for Sustainable Community Development, Simon Fraser University (www.sfu.ca/~ssbc/Resources.htm).
SPECTRUM (2004), Review of Specific Urban Transport Measures in Managing Capacity, SPECTRUM (Study of Policies regarding Economic instruments Complementing Transport Regulation and the Undertaking of physical Measures) (www.its.leeds.ac.uk/projects/spectrum/downloads/D2.pdf).
STPP (1998), Making The Most Of The New Transportation Bill; The Online Companion, Surface Transportation Policy Project (www.istea.org/guide/sm.htm).
SUMMA (2003), Fast Simple Model, SUMMA (Sustainable Mobility, Policy Measures and Assessment) (www.summa-eu.org). This is a model for operationalizing the concept of sustainable transportation by predicting the impacts of various policies and programs.
Joseph M. Sussman (2001), Transportation Operations: An Organizational And Institutional Perspective, National Dialogue on Transportation Operations (www.ops.fhwa.dot.gov/Speech%20Files/Sussman1.doc).
Subsidy Scope (2009), Analysis Finds Shifting Trends in Highway Funding: User Fees Make Up Decreasing Share Subsidy Scope (www.subsidyscope.com); at www.subsidyscope.com/transportation/highways/funding.
T&E (2000), Counting the Kilometres - And Paying for Them; How to Introduce an EU Wide Kilometre Charging System, European Federation for Transport and Environment (www.t-e.nu).
Govinda R. Timilsina and Hari B. Dulal (2008), Fiscal Policy Instruments for Reducing Congestion and Atmospheric Emissions in the Transport Sector: A Review; Policy Research Working Paper 4652, World Bank (www.worldbank.org); at http://econpapers.repec.org/paper/wbkwbrwps/4652.htm.
Transport 2000 (1998), Winners and Losers: Company Car Tax Reform, Transport 2000 (www.transport2000.demon.co.uk).
TransPriceProject (www.cordis.lu/transport/src/transpricerep.htm) is a major European project to investigate a trans-modal, integrated pricing and financing regime for urban transport.
TRB (2006), The Fuel Tax and Alternatives for Transportation Funding, Special Report 285, Transportation Research Board (www.trb.org).
UNEP (2011), Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication, United Nations Environment Programme (www.unep.org); at www.unep.org/greeneconomy/Portals/88/documents/ger/GER_synthesis_en.pdf.
USEPA (2001), Directory of Air Quality Economic Incentive Programs, U.S. Environmental Protection Agency (http://yosemite.epa.gov/aa/programs.nsf).
William Vickrey (1992), Principles of Efficient Congestion Pricing, Columbia University; at www.vtpi.org/vickrey.htm.
Martin Wachs (2003), Improving Efficiency and Equity in Transportation Finance, Center on Urban and Metropolitan Policy, Brookings Institute (www.brookings.edu/es/urban); at www.brookings.edu/reports/2003/04transportation_wachs.aspx.
Margaret Walls and Jean Hanson (1996), Distributional Impacts of an Environmental Tax Shift: The Case of Motor Vehicle Emissions Taxes, Resources for the Future (Washington DC; www.rff.org/disc_papers).
Dr. Rainer Walz, Dr. Joachim Schleich, Regina Betz and Carsten Nathani (1999), A Review of Employment Effects of European Union Policies and Measures for CO2 Emission Reductions, Fraunhofer Institute (www.isst.fhg.de).
WCEL (2004), Smart Bylaws Guide, West Coast Environmental Law Foundation (www.wcel.org/issues/urban/sbg). This comprehensive guide describes smart growth practices, provides technical standards and model bylaws that can be tailored to specific municipal circumstances, and includes numerous case studies.
Asha Weinstein and Jennifer Dill (2007), How to Pay for Transportation? A Survey of Public Preferences, Transport Policy (www.elsevier.com/locate/transpol), Vol. 14, No. 4, July 2007, pp. 346-356;
Charles Wheelan (2005), “Want to End Traffic Jams? Raise the Prices,” (http://finance.yahoo.com/expert/article/economist/1096) and “Taxes Can Be Good For You” (http://finance.yahoo.com/expert/article/economist/3470), The Naked Economist.
Arthur Wiese and Barbara Tierney (1998), The Cost Impacts of a Carbon Tax on U.S. Manufacturing Industries and Other Sectors, Research Study 081, American Petroleum Institute (www.api.org).
World Bank (2000), Cities on the Move; A World Bank Urban Transport Strategy Review, World Bank, Urban Transport Section (http://wbln0018.worldbank.org/transport/utsr.nsf).
This Encyclopedia is produced by the Victoria Transport Policy Institute to help improve understanding of Transportation Demand Management. It is an ongoing project. Please send us your comments and suggestions for improvement.
Victoria Transport Policy Institute
www.vtpi.org info@vtpi.org
1250 Rudlin Street, Victoria, BC, V8V 3R7, CANADA
Phone & Fax 250-360-1560
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