On clobbering motorists: the devil in the details of “polluter pays”

Making drivers pay more for fuel will not create a good bus service.

This morning I see James Moore, in The Independent, saying “Jeremy Corbyn is right to spend a billion on buses – but the best way to pay for it is by clobbering motorists“. Moore makes some good points, but his conclusion – “the truth is, making motorists pay more for the pollution they cause and the roads they use would be just as beneficial a policy as getting more buses on to the roads” – is, I think, both a political disaster and, even if it were not that, incorrect in its understanding of the economics of reducing road traffic.

I’ll confess that taxing fuel – or, much the same thing, raising the vehicle excise duty (“road tax”) – does appeal to me, as I contemplate our carbon footprints, foul air, and cities, towns and countryside not fit to walk or cycle in. We need fewer cars. Anyway, isn’t it just the well-known “polluter pays” principle, applied to the particular case of the automobile?

If you raise taxes on driving – or, to be more specific, on motor fuel – who pays? People who have a convenient alternative – good bus service, or an environment well suited to walking or cycling – may simply switch modes of transport, and pay nothing at all; indeed, the tax could well save them money and improve their health. If you live and work in inner London, the alternatives are well developed, and if the fuel tax rises and that leads to a rise in taxi fares (taxis – black cabs and Uber – make up a huge share of inner London car traffic), then whether you choose to pay or choose to switch to the bus, I’m not going to weep. But most people in the UK are not in that situation: perhaps their workplace is not on a good transit route from anywhere near their home (or from anywhere near anyplace at all they can afford to live); perhaps they live in that very large portion of the country which has not only been stripped of good bus service but has been rebuilt to be hostile to walking, cycling, bus riding – to any form of transport other than the automobile. How would these people – the majority of drivers – respond to a rise in fuel tax? They might drive a little bit less. Next time they buy a new car, they might pay more attention to fuel efficiency. But, mostly, they will pay, and they will not cut their driving or their polluting very much. They would provide some revenue to pay for busses (as Moore hopes), but not nearly enough to pay for good bus services: it won’t be enough both because so much of the country has been rebuilt to favour the automobile, and because the taxes won’t reduce driving by enough to clear the traffic to allow buses to move.

Why does the polluter-pays principle fail us here? With taxes which are designed to change behaviour, we need always to think about what alternatives people have to the thing that’s being taxed. Put a small tax on plastic carrier bags, and the substitute is easy and cheap: I can bring my own bag to the shop – it’s an easy change for me to make, and it costs me nothing. You can put a small tax on salt, and there my alternatives aren’t so good – I want on my food what my taste buds tell me, and anyway my body can’t do without salt entirely – one of the reasons taxing salt was historically an effective way for governments to raise revenue. For many people in the UK, use of a car is more like salt than it is like plastic shopping bags: the substitutes are bad, so if the tax is imposed they will pay it.

Taxing my car use is more complicated than taxing either my salt or my shopping bags, though, because the alternatives to car use are mostly things I cannot provide for myself: I can bring a bag to the shop with me, and I can decide reluctantly to do as my doctor advises anyway and reduce the salt in my diet, but I can’t provide my own bus service, or build my own network of bike paths, or rebuild my town so that the shops are within walking distance of the houses. Good alternatives to car use require public budgets; political decisions about how to share the road between different modes of transport (bus lanes! cycle tracks!); and, over a period of many years, better town planning.

Without these public measures in place, a higher tax on motor fuel achieves a small reduction in car use at a very high cost: it disproportionately hurts people who are badly served by transport; it is a regressive tax, meaning that it takes a much bigger share of the incomes of people whose incomes aren’t very big to begin with. For these reasons, a policy of reducing driving that is centered on “clobbering motorists” is a political non-starter. And, even if it could be won politically, without the alternatives are not in place, it is a rather ineffective way to reduce car use.

There is no politically easy way to reduce car use, because drivers have been given extraordinary privileges which it is hard to claw back. But there are plenty of ways that are less expensive, more effective, more fair – and thus, once won, politically more sustainable – than hiking fuel duties.

First and foremost is the need to reclaim some road space for non-car alternatives. Buses should not sit in traffic – they need bus lanes, continuous and enforced. Cyclists need safe, separate tracks – again, continuous ones, which don’t give up and dump cyclists into traffic at messy junctions or narrow spots in the road: otherwise, most people don’t feel safe cycling, or seeing loved ones cycle, in cities and towns. Both bus lanes and cycle tracks require space, and unless you expand road space substantially (not a good idea, if you want to reduce car use and pollution), they require reducing the space devoted to private cars. That puts a burden on drivers just as fuel tax does – the burden is one of congestion rather than pounds and pence, but time is money – but it does a much better job of facilitating the alternative than simply boosting tax to pay for buses that are stuck in traffic.

Second is road pricing – charging for road use in towns and cities. Why just in-town road use, when driving down the motorway likewise produces CO2? The point is to target driving which interferes with the opportunities for other people to choose not to drive: if I drive in a congested town, I slow down many buses and discourage many people from cycling or walking and, frankly, I should pay for that. Notice that we’re back to the need for alternatives to driving, and looking at that need from the other side: just as taxes are an ineffective and unfair way of discouraging driving when the alternatives are inadequate, taxing my driving does double duty when that driving is interfering with other people’s alternatives.

Comprehensive road pricing, however, requires substantial discussion before it’s agreed, followed then by substantial investment – we won’t have it tomorrow, or even next year. It could be introduced in stages, starting with commercial vehicles, such as taxis and delivery vans. In the meantime, for the mass of private motor vehicles, a stop-gap alternative is to target parking rather than driving – specifically, to tax employers who provide workplace parking, and retailers who provide customer parking.

Employers are often in a position to encourage alternatives – by subsidising transit passes for employees, providing bicycle parking, providing showers, allowing flexible working hours to avoid peak fares. Making the business pay for each employee parking space – as with Nottingham’s workplace parking levy – encourages them to provide that encouragement.

Free retail parking encourages driving; the unpriced costs (pollution, traffic hazard) of my driving to the store amount to a subsidy for superstores over the high street shops I could walk to: end that, by charging retailers for each car trip their car park generates.

In addition to providing a quick-and-dirty alternative to road pricing, taxes on employee and customer parking help chip away at the mindset which holds free storage of private cars – parking – to be a right, as if we always lived on that particular corner of the Monopoly board. Many people act as if they were entitled to free (or heavily subsidized) parking not only where they work and when they shop, but on the public street in front of their house; buy a new house or flat and it is likely to come with a parking space bundled in – you pay for it if you have a car, but you still have to pay for it if you don’t. We need to learn from Donald Shoup about the high cost of free parking

In the longer run, of course, we need all new development and redevelopment to be done in a way that encourages walking, cycling, and transit use, and discourages car use.

I don’t doubt that James Moore, and most advocates of polluter-pays pricing of motor fuel, would support many and perhaps all of the measures I’ve outlined here. And I am certainly not a fan of low fuel taxes. But polluter-pays is seldom as simple as it sounds; both the effectiveness and the fairness of such taxes depend on the alternatives available. When those alternatives depend on public provision, then the providing them is more complicated than the tax itself. Labour deserves praise for promising greater spending on buses, but that’s actually the simple part of the public provision of alternatives, which requires attention to road space, parking, town planning, and better targeted taxes.

 

 

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