250k Economics Prize winner is wrong?

michaels

http://www.bbc.co.uk/news/business-40600082

Suggestion for taxing roads - a charge per mile levied by the insurance companies to replace vehicle excise duty and fuel tax. Variation by manufacturer claimed vehicle mpg helps but:
1) Economically speaking not all miles have equal opportunity cost. Driving on a busy road brings an externality in the form of increased congestion which driving on a quiet road does not. Fuel tax at least addresses this partly in that driving in congestion results in worse mpg and thus more tax paid.
2) Basing the charge on the stated mpg means that there is no incentive to drive in a fuel efficient manner - even driving with a heavy right foot and doing 10mpg you pay no more tax than a hyper-miler who achieves 50mpg in the same car. Remember petrol without tax is only about 30p a litre so very little incentive to conserve fuel (and the environment) by driving more responsibly.
3) Behavioural economics suggests that immediate stimuli are most effective in driving behaviour. Paying the tax every time you fill the tank helps concentrate the mind on how expensive driving is thus helping to ration the available road space. Paying only monthly or at the end of the year will be a painful shock but much less immediate in terms of nudging behaviour patterns.

Just goes to show that for every complex problem there is a solution that is elegant, simple and ....wrong.

GreatApe

Put a simple cheap smartphone in every car and it wouldn't be too difficult to do both mileage and time of use charging and even particular roads could be charged more and you can have toll roads without the need for a toll

This smartphone should also speak out the cost of the trip at the end of each trip so drivers know how much their needless trip to the supermarket to pick up just one loaf of bread actually cost. Much better than the by weekly fuel fill up. Sat navs and Map software should also include cost data not just miles and estimated time.

chucknorris

ilovehouses wrote: »

I quite like fuel tax. It's simple and cheap to administer, difficult to avoid and you get a regular reminder of journey costs. I'd build car tax into it as well and get rid of what is just another motorist tax.

You save tax buy driving less and having a more efficient car which is how it should be.

This would never work, and would be totally unsuitable, it is far too simple and fair, surely they could find a more complicated unfair system, as they usually do.

Herzlos

ilovehouses wrote: »

I quite like fuel tax. It's simple and cheap to administer, difficult to avoid and you get a regular reminder of journey costs. I'd build car tax into it as well and get rid of what is just another motorist tax.

You save tax buy driving less and having a more efficient car which is how it should be.

It solves all of the car taxing problems, which is why it'll never be used. Impossible to avoid, more tax if you: drive fast, drive when busy, drive a poorly maintained car.

It's unworkable for electric cars though, so I think basing it on mileage is the only way to go. Ideally in a fairly low-tech way like counting mileage at MOT time, or introducing lots more tolls / congestion charges.

Basing it on travel time or route is just going to force people to travel the quieter routes and produce congestion, or travel at different times and move the rush hour about.

michaels

They are proposing first mot at 4 years tho....

vivatifosi

Interesting point re electric cars.

The one concern I have is with unintended consequences. If this is rolled out, then the heaviest costs will be borne by haulage companies.

I recall.bugs some time ago mentioning foreign hauliers filling their tanks before getting to the UK, making UK truckers less competitive. This feels like a further detrimental effect.

If the cost of delivery of goods goes up, that would feed into inflation which is already high. Would this penalise the poorest, who can't afford to run a car and therefore gets no beneficial offset, the most?

System

Herzlos wrote: »

It's unworkable for electric cars though, .

Well obviously a tax on petrol won't work for electric cars, but there are available equivalents surely?

Vehicle taxation serves three aims:

1) pollution reduction
2) congestion reduction
3) to raise government revenue

(1) only applies to petrol and diesel, so there would be no problem with a tax that applied only to those vehicles
(2) applies to all vehicles - it's the location and the time of day that matter, so some kind of smart meter taximeter thing in the car, triggered by roadside detectors would seem to be the way forward.
If you want to take your car into cities or travel in the rush hour then you need to subscribe to a black box and your account will be charged automatically
3) would follow automatically from (1) and (2) depending on the tax levels set.

antrobus

vivatifosi wrote: »

Interesting point re electric cars...

Interesting?

I believe that the tax take from RFL for 2016-17 was £27.6 billion. In fiscal terms that's real money. If everybody starts driving around in electric cars a replacement revenue stream will have to be found. As in sticking 5% on the basic rate, for example.

Plus, of course, all these electric cars will increase demand for electricity. Someone will need to build some more power stations and upgrade the grid.

antrobus

I think that New Zealand has some kind of mileage based vehicle tax. (From watching Motorway Patrol on Pick TV)

Hang on, see here. You buy a license in advance.

http://www.expatfocus.com/expatriate-new-zealand-car-tax-insurance

Herzlos

No reason electric cars can't pay some form of RFL.

bugslet

ilovehouses wrote: »

The consumer gets to choose. If they want to pay more for their goods so the retailer can deliver them to stores/ depot using a fleet of filthy diesels when the roads are most busy that's up to them. My view is it will become ever more cost prohibitive to continue doing this.

The future's electric for personal transportation as well as haulage. Tesla reckon they'll be in production of an HGV type vehicle by 2020.

I don't know why more goods aren't transported overnight to ease congestion. Is there a reason for this other than people don't like working nights? There must be some incentives to encourage this to happen such as higher road weight limits between 10pm and 6am for example. If overnight haulage costs can be reduced it becomes self-fulfilling because demand will shift from day to night.

The daytime should be left clear for us to go about our business and nighttime for things that service our needs.

Well I for one would finish working because I'm not working at night. It isn't just the truck drivers, it's every business they deliver to, shops, building sites, just in time supply chains, farms.

I don't deliver to any of those forms of business, I deliver purely to other businesses and they aren't open at night. I very much doubt if all of them will be happy about having to put staff on to load and off-load.

For large awkward loads that need cranes, you want daylight.

Whilst my job is partly to control the operational side of the business, ie planning the trip, I also need to talk to the drivers during the day, sort out any problems that occur. I occasionally get woken up in the middle of the night now, and that's bad enough.

And for the ferry that leaves at 16.00, do I then have to have a truck and driver at port at whatever arbitrary time is decided we can run till.

Then there is the case of the long distance lorry drivers, for whom there is poor to inadequate provision of overnight facilities. There are plenty of UK drivers that are out all week. Parking in a layby in a truck is bad enough at night, parking in the day is horrible - I know, I've done it. European drivers then face the same problem.

I think you'd be surprised by how much straightforward/ routine freight is moved around at night; night trunking is an option and it works well for stuff like chilled goods and supermarket dry goods or large supply depots delivering smaller hubs. The holy grail in trucks is to get the wheels moving pretty much non stop and some literally only get the ignition switched off when they go in for service.

Logistics accounts for 2.4 million jobs in this country, it's a necessary service and a nice source of income for the government. Broadly speaking, every truck on the road donates over 55k to the government annually.

Really the best way to get trucks off 'your' road is to stop buying anything that's brought by a truck.......