Congestion charges not fuel taxes

A good article by Mingyue Sheng and Basil Sharp:

Congestion pricing, not fuel tax, holds the best promise of easing Auckland’s traffic woes and future-proofing road funding.

Transport should be user pays. A fuel tax is a proxy for user pays, but allows a far more accurate charging regime.

Central Government collects revenue from a countrywide fuel tax that contributes to the national road networks. Ratepayers contribute to the development and maintenance of local roads. Those travelling by public transport pay a fraction of the total cost of that service – ratepayers contribute too, even if they don’t use public transport.

This means that, ironically, transport infrastructure is one of the few government services where there is an extremely weak connection between user pays and service. Many Auckland residents pay the fuel tax and don’t use the national network.

Those using the local network see little connection between the rates they pay and the quality of the particular roads they drive. Transparency is lacking and there is a serious misalignment between who pays for the roads and who uses them.


Now if the extra money from the regional fuel tax was used to fund light rail to Westgate and to the airport, then commuters on those routes would benefit from the switch to public transport, but the cost would be shouldered by everyone who buys fuel in Auckland.

This would hurt lower-income households more because fuel taxes are regressive – fuel accounts for a bigger portion of lower-income households’ pay compared with better-off households.

A fuel tax is regressive. It will take money from all motorists and provide benefits to just a few people.

In the long run, modelling predicts higher petrol prices will encourage the use of more fuel-efficient cars and a switch to hybrid/electric vehicles, rather than a wholesale shift to public transport. This means inevitably revenues from fuel taxes will decline. How will infrastructure be funded then?

Congestion pricing offers at least part of the solution to both congestion and this looming funding gap. The technology now exists to charge users per kilometre travelled, time of travel and location, and to vary charges across the day and week to flatten out traffic peaks.

Not only would this be more persuasive in changing behaviour, it would allow for better alignment of infrastructure assets with use.

Raising fuel tax will not solve Auckland’s congestion. Transport policy needs to step into the digital age.

I agree absolutely. You should pay based on not just how long you travel for, buy which roads you travel on and if you travel at peak or off peak times.

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