Taxing public goods and congestion pricing

[mattbell]

Most of you are familiar with London's congestion pricing system, where you have to pay a fee of around $14 to drive into downtown London during peak hours.  The system was designed to eliminate its famous downtown congestion.  Reports of its success have been controversial, but positive enough that other major cities are looking at it. 

The Netherlands is considering a nationwide system that will continuously tax people based on what roads they are using, how far they drive on them, what time they're using them, and even how fuel-efficient their vehicles are. 

http://www.worldchanging.com/archives/009146.html

(It's not approved yet, and even if it is approved, it will take around 10 years to fully implement)

This sort of system, which has only become possible with recent computer vision technology, will allow for much more accurate taxing for use of public goods.  Right now, Americans pay the same amount in taxes for roads and highways whether they drive for 1,000 miles per year or 20,000 miles per year.  That's unfair. (A commenter has pointed out that gas taxes do charge heavy users of roads more than light users, though gas isn't the only source of road funding)  It would be much fairer to have people pay according to how much they use the system.  This congestion tax covers two public goods -- roads and air cleanliness.  Cars that chew up the road more would be charged more for the increased maintenance that the roads will require, and cars that pollute more will be charged according to how much pollution they put out.  This helps people understand the true financial consequences of their actions and behave accordingly, which makes the whole system work better.

Comments

[easwaran.livejournal.com]

This sort of tax strikes me as regressive, since it will disproportionately affect poor people. Of course, most fines are like that. But apparently in Scandinavia costs for things like traffic tickets bear some sort of connection to the person's salary, so that there was a famous case of a Nokia executive stopped for speeding on a motorcycle and paying the equivalent of $50,000 or something for the ticket. Which really is important, because in order for these sorts of taxes to have an effect on people's behavior, they have to be using amounts of money that provide relevant incentives for people.

[nasu-dengaku.livejournal.com]

I heard about that. I wonder if it causes cops to set up speed traps in ritzy areas.

[easwaran.livejournal.com]

Do cops get money from speeding tickets? I suppose there's really no way to have a government either collect revenue or impose fines without putting perverse incentives of some sort somewhere in the system - I guess the question is just about how to get the strongest incentives at the desired points. If you really want to cut down on carbon emissions and road usage, you have to make the costs really hit those who do the most of these things. But if libertarians are right that government inefficiency is a result of the fact that government officials aren't as responsive to financial incentives for the government as corporate officers are to financial incentives for the corporation, then we can assume that the government would be less inclined to act on these perverse incentives. But that's a big if.