Opinion
April 16 2010
Tax options for greener transport
The
introduction of a road user charge in the Netherlands in 2012 could be the
first step in changing transport cost structures around the world. On
November 13th 2009 the Dutch government approved the introduction of
kilometre-based charges for heavy goods vehicles and passenger cars to be
fully implemented by 2018 .
And with the contents of the Federal Government’s Henry Review of
Australia’s Future Tax System still to be revealed, it is no stretch to
imagine that some consideration of road use charges could well be on our own
tax radar in the future. Among its 13 recommendations to the Review, the
Australian Automobile Association
suggested that there be a direct charge for road use with a clear link
between revenue gained and expenditure on road transport infrastructure.
The road user charge in the Netherlands will see payment made for each
kilometre driven, all carefully monitored thanks to Global Positioning
System (GPS) technology to be installed in each vehicle. Every company,
non-profit organisation and public sector body will need to track, trace,
record and explain the level of costs associated with kilometre based
charges, as will many individuals.
The GPS will not only record each journey but also take into consideration
the speed, noise pollution, road damage, time of travel (peak and non-peak)
and climate change gas emissions of the vehicle. Through broad consideration
of these critical factors affecting current congestion levels, the scheme
not only captures the environmental impact of using the road but takes the
debate much further by forcing emphasis on sustainable mobility, rather than
a narrow focus on the current vogue in environmental issues - reduction of
carbon dioxide equivalent emissions.
When the fall out from Copenhagen is behind us, transport will still be in
front of us blocking the way to a sustainable and higher quality of living.
As to be expected, in the new Dutch scheme vehicles, including trucks with
larger carbon dioxide emissions will pay a higher price to use the road
network.
Despite the growing mood of governments and manufacturers to push forward
low emission electric cars, even zero emission vehicles will be charged to
use the road, thereby highlighting the broader costs of vehicle
infrastructure establishment, use and maintenance to society.
Although the charge will be much less than for a normal car, electric cars
still use the valuable road system and potential road damage, road rage and
congestion remain large factors in the sustainability equation. Electric
cars will still need to contribute to these costs to society.
The proposed introduction of a charge to use one of the world’s busiest road
networks has been met with a positive reaction in general, primarily because
of the Dutch government’s long term planning for such issues.
Prior discussions and engagement of the public in debate over a period of
years has meant the system is well understood and generally perceived to be
fair and equitable.
Those who oppose the road-user charge principally base their arguments on
the potential for privacy breaches which accompany the GPS tracking process.
However, the UK Environmental Transport
Association claims the satellite technology, which acts as a tracking
device, is no more invasive than using a GPS mapping system, or sending an
SMS.
Introduction of the road user scheme will result in savings for many drivers
as the fuel and vehicle excise duties and purchase tax of 25 per cent will
be abolished, reducing variable and fixed operating costs and fixed costs of
investment. In their place will be the charge per kilometre.
The promised effect by government is a tax neutral outcome overall, but
heavier users of roads will end up paying higher amounts for the provision
and maintenance of road infrastructure.
For example, commercial vehicles, which on average travel further than
commuters and also contribute to congestion through road use at the busiest
times of the day, have a higher environmental impact, and will therefore,
pay more than commuters.
For users travelling long distances, lower fixed costs associated with lower
depreciation on assets which cost less because of a reduction in purchase
tax, and lower variable costs of fuel, will be more than compensated for by
user charges per kilometre.
Light users in contrast will find that the user charge per kilometre will
not be as high in total as the reduced fixed costs and reduced costs of fuel
excise.
Add to the mix the cost of carbon emissions and the complexities for
commercial operators mount.
For a poor environmental performer needing to purchase emissions trading
certificates to compensate for excess emissions of carbon dioxide,
equivalent additional variable costs will be incurred. For the user of a
green vehicle where emissions permits can be sold, the costs of road use
will be reduced. But the costs of road use will remain.
The net result will be that while the current carbon mania will have an
effect on road use, sanity will prevail in that road users will be held to
account for other environmental and social impacts and costs of road
systems.
In Australia, however, there is discourse amongst economists concerning the
level of prices that should be set for road transport. The arguments have
not yet developed into a successful model, such as that proposed by the
Dutch, which considers not just climate change gas emissions but the broad
implications of road use.
Currently, all cars whether for personal or commercial use, shoulder a
uniform excise charge of 36.1c a litre on petrol, and 19.6c a litre on
diesel.
With transport the third largest and second fastest growing source of
greenhouse gas emissions in Australia, the Dutch experience will be
important to observe.
Should the outcome from the introduction of the road user charge scheme in
the Netherlands be successful, it could serve as a model that would allow
Australia to move forward with a user-pays scheme thereby making progress
toward reductions in transport-generated greenhouse gas emissions and
ultimately, sustainability of our road network.
By Professor Roger Burritt, founding Director of UniSA's Centre for Accounting, Governance and Sustainability(CAGS) and Jo Tingey Holyoak, the Centre's Administrator of Research.
An edited version of this article was published in the Independent Weekly newspaper on April 16th, 2010