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| Draft Concluding Propositions Expert Group 6 |
| 2008-04-10 17:28:16 : James Laird (ITS, Leeds, UK) : J.J.Laird@its.leeds.ac.uk |
| Draft Concluding Propositions Expert Group 6 1. Transport taxation is an important source of revenue for governments to meet social objectives. It is therefore infeasible for governments to set transport taxation and charge receipts equal to expenditure on transport investment and operating costs. 2. A new pricing scheme should only be introduced if the objectives of the scheme meet the needs of society, is superior to the present pricing scheme, and its objectives cannot be met more easily by other forms of transport measure. Revenues need to be allocated transparently, alternative methods of travel need to be provided and fairness needs have to be considered very carefully. The benefits of the scheme should also be conveyed in an objective manner that focuses on the traffic and other problems and solutions people perceive as helpful. 3. As a means of raising additional revenue new infrastructure charges should be based on marginal social cost. That is the charges should differentiate by vehicle type, level of congestion/scarcity, type of infrastructure and time of day. Such a differentiated charge, on top of existing taxation levels will improve efficiency as well as raise funds for investment where it is justified. A complete replacement of existing taxes with such a pricing strategy in all sectors (not only transport) would be the most efficient reform, but this is not realistic as a pre-condition for transport pricing reform. 4. The charges may need to depart from marginal social cost in some circumstances, including: to prevent step-changes in prices (as new capacity becomes available) and to ensure a higher degree of cost recovery when marginal social costs are less than average commercial costs. Regulatory measures will also need to be used (for instance a cap on average congestion charges at the capital and external cost of providing new capacity) to prevent a situation in which excessive prices are charged and inadequate capacity provided, except in cases where there are external benefits justify this. 5. Marginal social cost pricing is not well understood by the public, who are better able to understand average cost pricing. This therefore acts as a barrier to implementation. It is therefore essential to continue explanation and education that external costs of congestion and environmental damage are just as real burdens on economies as the traditional costs of labour, materials, etc. Research is needed to understand if there is a material difference in the charges derived from marginal social cost based pricing (with mark-ups, caps and smoothing) and charges derived from average cost based pricing (with top-up congestion charges and low traffic subsidies). 6. Pricing and financing schemes need to be developed for whole networks and not for single links. Developing a scheme for multi-modal networks will be superior than developing separate schemes for each modal network. 7. There is efficiency advantages to a co-ordination of infrastructure prices across Europe, though remembering that where costs vary in different places, there is a prima facie case that charges should vary also. Member states are also interested in their own national tax revenues, and coordination of infrastructure charging may have implications for the legitimate balance of function between European and national roles. In resolving these issues, which are essentially political, it has to be remembered that cross border traffic is a varying proportion of national traffic in member states, and in most places local traffic is very much larger in terms of transport demand than long distance traffic. 8. Transparent earmarking of the infrastructure charge revenues to the transport sector will be necessary to achieve acceptability. Some form of income transfer (cross-subsidy) between regions, modes and class of user will also have to occur. It is quite infeasible to ensure that revenues are returned as investments to the exact location, individual and company where the charge was paid. Sensitivities exist between stakeholders regarding the exact form of income transfer. This forms a barrier to implementation and points towards context-specific solutions being developed. This makes it impossible to recommend a European wide solution to income transfer that satisfies the desires of all stakeholders. In some cases, the form of allocation of revenues will involve some or total tax neutrality (i.e. using extra revenues from new charges to reduce other forms of taxation), but new charges cannot be both tax neutral and earmarked to specific transport expenditures, as this would imply an increase in total taxation on other sources and an increase in total expenditure on transport: where this is justified, it should be done explicitly and deliberately as an act of policy, not as a by-product of pricing reform. 9. All investments made using revenues from charges must meet criteria of efficiency, environmental impact, and equity. (These allocations should be transparent, publicly reported, and subject to scrutiny, regulation and challenge by adequate political institutions.) 10. A European infrastructure agency, aside from a coordinating role, should be confined to paying grants to national or local governments on the basis of clearly defined criteria (e.g. proportion of through traffic, or meeting environmental objectives, etc) related to effects within EU competence. The grants would relate to specific projects, or packages of projects, or policy interventions. The agency would not determine which projects should go ahead, this decision remaining with national or local governments or groups of such governments. 11. National transport infrastructure agencies will assist in the efficiency and transparency of infrastructure planning. Objectives, strategies and decisions on major projects will always remain political and should be excluded from the role of such agencies. 12. At this moment in time it is felt that transport infrastructure agencies should be managed by the public sector. This is because there is a lack of research and evidence as to a successful form of regulation if a transport infrastructure agency were to be privately operated. There are arguably advantages to a transport infrastructure agency being managed by the private sector if this secures efficiency in management and ability to borrow from the financial markets. It would however need to be well regulated to maximise efficiency (including investment in new capacity) and minimise conflicts of interest between social and commercial objectives. 13. Acceptability barriers present the single biggest obstacle to the introduction of a pricing reform. There is important emerging research on the dynamic nature of acceptability, the influence of the implementation path on acceptability, the role of referenda and the interactions between different stakeholders and published opinion/media or lobby groups. |