Taxing congestion and getting something for it

Taxes, taxes and more taxes seem to be the new way of altering behavior in Australia. We seem to be seeking tax solutions for alcohol, cigarettes and now energy consumption. Congestion or auto use taxes for access to the central city, as a recent study for the State of Victoria suggests, is another target for taxation. Even the Henry Report suggests congestion taxes as a way of modifying auto use and supporting improved public infrastructure. Now there is a move on to impose some form of traffic congestion tax.

Congestion taxes work where there is already good reliable transit with good access like London and Singapore. Congestion taxes don’t end congestion but they move it. In some cases an entry fee does reduce traffic in a designated area of a city. If the goal is to reduce autos in the centre of the city then many forms of pricing will work. We already experience congestion taxes with parking fees, high parking violation booking, and bridge or road tolls. Even increases in petrol prices are a congestion tax. These indirect stealth taxes can be raised with little public debate and they have remarkable impacts on auto use. So, the real issue is what is the tax for and how is it implemented.

In London driving, or through specific area of the city, can result in a charge or fine for noncommercial vehicles in peak hours. Singapore employs an auto registration permit limiting days or hours cars enter certain areas. But in both London and Singapore there are many safe reliable public transit options. Most of the money from congestion taxes, in these and other cities, are used to extend or expand public transit. The driver who pays the fee benefits from the fee simply because other members of the family are using cheap public transit and reducing the number of family vehicles required. In short the congestion tax is one device to alter transportation behavior.

In several US cities like Denver, San Francisco and even L.A. voters have imposed taxes on themselves to increase and improve transportation alternatives. Auto ownership and miles traveled by car in the U.S. is going down. So, it is clear that the residents of these U.S. cities are acting rationally to save money on auto transport by shifting themselves and/or members of their families to public transit or other means to get to work or school and back. This is a smart choice.

Congestion taxes serve other goals too. They can make the central city a more pleasant place to work and shop that increases the retail experience. This is the case in London. Improvements in the pedestrian and bike experiences are showing similar results in New York. But in all the cities that use taxes also use rewards for not using the car to go to the centre of the city. These incentives include such things like reductions in transit fares for purchase of tickets through employers. New York uses this scheme to get the worker downtown and moves the casual rider to off-peak cheap fares to keep short-term drivers out of the city.

Other means such as providing cheap parking at suburban stations associated with the transit pass reduces single driver cars coming into San Francisco. Several U.S. cities are experimenting with staggered work hours and some employers in L.A. offer workers the option of working from employer work centers or home two or three days a week. Of course one of the best ways to reduce cars in the city is to reduce or remove tolls on roads and bridges for auto carrying three or more passengers from 5 a.m. to 8 a.m. who use high occupancy lanes with cameras as in Orange County, California. Heavy trucks should pay no tolls for operations between 10 p.m. and 5 a.m. City deliveries for light goods should be scheduled from noon to 3 p.m. with no tolls. We did something like this during the Olympics in 2000 in Sydney.

But there are other incentives we can and should look at that have not been tried in Europe, the U.S. or Canada. One idea we should try is morning and evening peak hour zone taxis that pick up and deliver three or four passengers with fixed fares from designated places in every suburb to and from the central city. Taxis carrying these full loads would be exempt from all tolls. Riders would use travel cards loaded with a money value for these cabs. The same cards could be used for trains, buses or ferries. Since the travel card would have a monetary value people would use them rationally with buses and trains cheaper than taxis or ferries. A taxi, operating as a zone cab in the morning from a suburb six kilometers from the city would charge each passenger‘s card around $10 or $30 for three people with no tolls. This is a decent deal for the driver’s first trip into the city in the morning. Travel cards similar to this are already in use in Hong Kong, London and New York (but they don’t have the taxi option).

To make this work built in discounts for the travel cards would be designed at the purchase point such as the employer’s Human Resources department or credit union or even local bank where the person has an employee account. Cards purchased at employer location would have deep discounts such as $300 card might get $50 in bonus travel. All urban-based public employees should be issued universal travel cards in place of automobiles. Senior staff would be able to use the cards for any work travel anywhere in the region by taxi or other means. Other public employees would receive $100 for every $100 purchased via their monthly salary package. In the central city travel cards of any type would entitle the cardholder to free transit in off peak periods. Portland and Perth have schemes like this that work very well.

Finally, we might introduce ride sharing vans for outer suburbs with the state subsidising minivan purchases for the drivers along with low cost discounted fuel using a state minivan ID as well as provide all minivans discounted insurance for vehicle and operator. Vans would carry five or more neighbors to work daily into the city or other major suburb. These neighbor vans would have public free parking areas in centrally located garages. Drivers would have to attend driver training and have special licenses to insure safe operations. Travel cards could be used to pay the van driver daily or weekly. California has such a program in place already.

Some taxes will be needed to better integrate all forms of transit from better and safer footpaths to bike storage and cleaner greener trains and buses along with interesting clean vibrant transit stops. Financing these improvements can come from value capture on increased property taxes along transit corridors without introducing any new taxes. This approach is widely used in the U.S. and more recently in the U.K. The measures I describe can reduce auto traffic into the central city, make city shopping and visiting easier and reduce CO2 as a kind of self-imposed carbon tax. If we are going to tax congestion let’s get something for it and have a better environment too.