Road Pricing

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This article by Alison Payne first appeared in issue 18 of Scottish Policy Now.

Tackling air pollution and helping protect our environment for future generations are critical, but while proposals to end the sale of new petrol and diesel cars by 2032 are ambitious, Reform Scotland believes that there are policy changes we can start making now which can help contribute towards those goal. Specifically, we think current motoring taxes should be replaced with a pay-as-you-drive road pricing scheme.

Although vehicle excise duty (VED) takes account of the potential carbon emissions from a car, it punishes infrequent drivers by charging them the same, if not more, than frequent drivers. Someone with an old car who doesn’t drive very often, therefore causing less pollution, can end up paying more than someone who has a newer car but drives all the time. As it is easier for wealthier individuals to upgrade to more fuel-efficient models on a more regular basis, it may also often be the case that this inbuilt unfairness penalises less well-off drivers.

In addition to VED, fuel duty is simply a blunt and unfair instrument which takes no account of where and when people are using the roads. In a country as diverse geographically as Scotland, taxing someone simply because they are driving a car is unfair as it doesn’t reflect the ability of that individual to choose another mode of transport and takes no account of the congestion they are causing.

Reform Scotland believes that there should be three clear policy objectives to motoring charges:
• To reduce carbon emissions;
• To reduce congestion;
• To increase fairness.

As a way of meeting these criteria, we would like to see the Scottish Government carry out a feasibility study into how a national and local pay-as-you-drive road pricing scheme in Scotland might operate. We would favour a scheme which charges motorists a variable rate for road usage depending on when and where they are driving, as we believe this is a fairer and more efficient way of allocating scarce road space. And while the Scottish Government would be ultimately responsible for the scheme and would probably price motorways and national trunk roads, we would advocate local authorities setting local road prices in their area.

There are plenty of potential benefits of road pricing, many of which have been seen in other countries which have introduced similar schemes. For a start, it would help to reduce carbon emissions from road transport since people will more readily consider using public transport, car shares, cycling or walking, as well as shopping more locally.

Further, road pricing will reduce congestion and journey times which will benefit businesses and the economy by leading to quicker and more reliable movement of people and goods.

And it will be fairer. All drivers will pay a fair price for the roads they choose to use and the times they choose to use them, so they are charged appropriately for their impact on the road network and the wider environment. Infrequent drivers will pay less than frequent drivers and people who live in more rural areas with less access to public transport, or who have to travel during unsocial hours, will pay less because they cause less congestion.

Importantly, road pricing is intended to link drivers’ choices with the actual impact of the decisions they make.

If a proportion of the revenues from the charging scheme went towards improvements in public transport, then this could be an additional benefit.

Reform Scotland believes that the best way to implement a road pricing scheme in Scotland, and ensure it gained public support, would be for it to replace existing motoring taxes, and not used as an additional means of raising revenue.

For this reason, such a system could not be implemented in Scotland at present as it requires the Scottish Parliament to have control over VED and fuel duty.

However, road pricing is a good example of how greater fiscal powers could be used to introduce a completely different approach to a particular policy area.

Scottish Government statistics have illustrated that although overall greenhouse gas emissions in Scotland are declining, road transport was the largest source of emissions in 2016. Emissions from road transport increased by 7 per cent between 1990 and 2016. In other words, the current taxation regime is not effective at changing behaviour. A new fairer and more sophisticated method of charging for road space needs to be introduced and Reform Scotland believes that a Pay-as-you-drive road pricing scheme should be considered.