Road pricing "could enable big tax cuts"

NGO promotes Swedish study predicting revenue worth 3% cut in income taxes

Urban road pricing could raise large sums of money without damaging transport efficiency, according to European NGO Transport and Environment (T&E). Yesterday, the group presented the results of a Swedish road pricing study at a conference on road pricing in Brussels. The conclusion, Magnus Nilsson of T&E told ENDS Daily today, is that surpluses could be generated that could enable a 3% cut in income tax.

T&E is campaigning for greater use of road pricing, not simply as a way to increase the cost of transport, but also as a tool to manage transport demand. "Existing schemes don't really try to reduce traffic because they want to collect as much money as possible," said Mr Nilsson. The Swedish study shows that a scheme focused on traffic management can also increase efficiency.

The study presented by T&E was published last year but has been little publicised outside Sweden. Carried out by the Swedish Institute for Transport and Communications Analysis, it used modelling techniques to simulate the effects of road pricing in Stockholm applied to both private and public transport. Modelling assumptions included increased public transport fares as well as road user charges for private vehicles.

The study predicted that there would be big benefits for most groups. Traffic volume in the local region would be reduced by 3%, and in the city centre by 20%. The external costs of car emissions and accidents would fall by some SKr200m (Ecu23.5m). Business travellers using the city centre would benefit by some SKr150m, while bus users would also benefit. The overall benefit to taxpayers would be some SKr900m, while the main cost, some SKr625m, would be paid by private motorists who continued to use their vehicles.

"Combining road user charges, increased public transport fares and increased public transport service frequency in Stockholm has an overall welfare improving effect," the study concluded. "If corresponding measures [are] taken in other medium to large cities, other general measures to meet [environmental goals] need not be that strong."

For T&E the study shows concretely the possibility of quite large tax shifts. "This is too attractive to be avoided in the long run; there is too much money to be won from it," Mr Nilsson told ENDS Daily.

Follow Up:
Transport & Environment, tel: +32 2 502 9909; Swedish Institute for Transport and Communications Analysis, tel: +46 8 50 62 06 00.

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