Unfare solutions : taxing vices to solve the transport crisis

A key element in all national and local transport policies addressing environmental goals is the development of attractive and popular public transport systems as an alternative to car travel. This often requires major investment, at a time when already stretched traditional public spending levels are also needed to fund improvements to other sectors, and when electorates are reacting against paying higher taxes. One approach has been for Governments to cut costs through privatisation, and/or efficiency savings, and this path has become increasingly trodden on over recent years. Less common are examples of local transport authorities raising money specifically to pay for improvements to public transport through dedicated local charges and/or taxes. As well as raising money for public transport development, such new sources of financing can themselves be urban transport tools (e.g. road tolls and parking charges). The issue of new sources of finance for public transport investment and operations is one that exists whatever form of ownership or regulation model is adopted, and the links between these financing mechanisms and transport policy are increasingly important. The use of such instruments has moved up the transport policy agenda in recent years, but actual experience appears limited. The paper reports the results of a CEC study [1], to which the authors contributed, that identified numerous cases of local earmarked finance from across the world that have been used to fund public transport services. These range from fairly prosaic measures such as taxing property, to taxing oft-frowned upon activities (which may even be labelled vices) such as drinking, gambling, smoking, driving, flying, and shopping. A common framework was also developed to allow policy makers to evaluate each case’s appropriateness for their own needs.