Cyclists are hit with sticks when they should be fed with carrots

Driving while distracted with cellphone

There’s a strong economic argument for paying people to cycle (it happens in Denmark, for instance), and to raise fuel taxes to force motorists to drive less.

Cycling is healthy, green and low impact; driving leads to obesity, is carbon-wasteful and destroys roads.

‘Smart taxes’, first advocated by early 20th Century English economist Arthur Cecil Pigou, need to be levied to correct such imperfections. Activities that have high external costs to society – such as getting in a car for every short journey – need to be reined in by being made much more expensive.

Cycling, which has many benefits to society, needs to become much more financially attractive. The UK Government’s Cycle to Work salary sacrifice scheme is just the start. Let’s pay cyclists to cycle. Let’s put a monetary value on the concept of One Less Car.

Pie in the sky, of course, no Government – not even one with a commuter cyclist as Prime Minister – would ever dare risk the wrath of the motoring public. But without financial – and infrastructure – disincentives, motorists will continue to clog up the roads; kill fellow motorists, cyclists and pedestrians; and burn precious fossil fuels.

Petrol should be a lot more expensive than it is. Vehicle Excise Duty should be massively hiked. As it is now, it’s a blunt tax. It costs the same to tax a car that drives 150 miles a year as a car that drives 15,000 miles a year. VED is no disincentive to driving. [And, as the rest of this site was built to point out, VED is not a ‘road tax’, it doesn’t fill a ‘road fund’ to maintain or build roads].

And it shouldn’t be the motor industry propped up with ‘scrappage schemes’ it should be the bicycle industry.

All airy-fairy, lentil-loving ideas, of course. Daily Mail readers would have punched through their computer screens by now. Or wet themselves laughing.

But our finite globe can’t cope with more and more cars.

Higher ‘gas taxes’ might seem a radical concept but it’s relatively mainstream among economists, especially those who admire Arthur C. Pigou. Members of the so-called Pigou Club – including cross-party, big-hitter economists – advocate taxing “negative externalities” and subsidising “positive externalities.”

A good, recent example of a Pigovian tax was the new ‘green road tax’ system to be introduced in the Netherlands. It was later withdrawn following complaints from motorists (the Netherlands isn’t just a country of bicyclists, it has a severely congested road network). Motorists would have had to pay according to distance driven. The reasoning was that it’s only fair that heavy users of the road (in both senses of the word) pay more than those who often leave the car at home. Congestion and the environment were both taken into consideration in the putative scheme. Driving a 4×4 on a city road in rush hour would have attracted more of a charge than driving a 2CV out in the sticks. The system should have started in 2011 for freight transport and was to be expanded to include cars in 2012.

Drivers were to be charged an average 3 Euro cents per kilometere. The tax should have increased every year until 2018, when it would have cost an average 6.7 Euro cents per kilometere to drive in the Netherlands.

The Dutch Government argued its new tax would have benefitted 6 out of 10 drivers, with those driving the most and at peak hours bearing the greatest burden. But Dutch motorists talked down the plan and so will be faced with extra road congestion for all in the years ahead.

Pig off
Economics teacher/blogger and time trial cyclist Tejvan Pettinger, found via Rainmiles, is a proponent of a Pigovian subsidy for cyclists. On his blog, he writes:

“Cycling creates positive externalities (Benefits to the rest of society, not felt by the personal users). This means the social benefit of cycling is greater than the private benefit. If I cycle, other people benefit in the form of less congestion, less pollution, healthier society…

“Cars should pay road tax and petrol tax because they create negative externalities; the social cost is greater than the private cost. The tax system is a way of making motorists pay the true social cost.

“I would argue that lorries and heavy goods vehicles should pay extra taxes because they create the most negative externalities and the social cost is higher than driving.

“If cyclists were subsidised it would encourage more people to take up cycling to work. This would help city centre transport systems and quality of life.”

On a blog posting about, Pettinger said:

“Cyclists are often criticised for not paying ‘road tax’ and [iPayRoadTax] is a worthy campaign to raise awareness that we all effectively pay for the road and its maintenance. It helps to provide a defence against aggressive motorists who would like to see cyclists pushed off the road, because occasionally they have to slow down to overtake someone.”

He also quipped he’d like to see a jersey emblazoned with his economic manifesto: “Higher Pigovian taxes for motorists! Subsidies for cyclists! Let’s try and achieve a Pareto optimal outcome on our roads!”

  • tejvanpettinger

    Thanks for mention. It's a very good post. Best,

  • Brenda Bell

    As a Libertarian I am against Government manipulating free society through taxation schemes; however, on the principle of equitable payment for goods and services I can support payment for road use based on the amount of degradation caused by one's vehicle (a function of the vehicle's projected area on/over the road, the time the vehicle was on the road, and the physical and chemical properties of the vehicle's propulsion).

  • jennywoolf

    I'm totally for cycling but have had 2 bikes pinched in London in the last 6 weeks. There is a really big organised bike theft scheme going on in the capital and these tossers may end up reducing the number of cyclists all by themselves. Next time, I'll paint out all makers names etc. on the bike (to make it harder to sell) and paint the spokes yellow (meaning they'll have to replace the wheels if they want to make it look anonymous). Most of all I will buy a lock costing £100.

  • carltonreid

    Jenny – check out this article on bike locking techniques, which includes security tips from bike thieves:

  • carltonreid

    Quite. And once this has all been added up, cyclists will be due a big fat rebate!

  • Keith Underdown

    Do the same arguments apply to train travel?

  • beerbiker

    Nice photo of the dreaded CAR DRIVER on the PHONE!!!

  • Brenda Bell

    In the Libertarian view, all roads would be privately owned and operated; transportation networks are not within the proper purvue of government. The costs of purchasing the land for the roads, building the roads, and maintaining the roads would be offset by tolls. The tolls we would pay as cyclists, versus those paid by other vehicles, would be determined by the road owners, as they please. (If the road owners don't want cyclists on their roads, they may ban us or charge us excessively more than they would charge the traffic they *do* want. It's *their* road.) An enlightened road owner would understand that we do not degrade his road as quickly as motor vehicles might, and mark his tolls appropriately. If we didn't like those tolls, we would build our own cycleways and charge cyclists for the costs of their construction and maintenance.

  • carltonreid

    Thanks. I took in London. It wasn't until later that I saw the driver was on the phone; I was trying to get a blurry pic of a car overtaking a cyclist and struck lucky that the motorist was driving illegally.

    No, hang on. Not that lucky; far too many motorists drive while phoning so I probably had a good chance of getting that particular shot.

  • carltonreid

    Check out the 'subsidy' pic at the base of today's article: It has to be asked why trunk road building is deemed of benefit to society as a whole, and not just just a benefit to motorists and so isn't referred to as subsidising drivers; and yet investing in railways is perceived to be a “subsidy” aimed at a small minority of rail passengers.

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  • ER

    If the cost of petrol or diesel is already mostly tax, (circa. 60-70%) then drivers are already taxed on how far they travel and it is an environmental tax as well due to the need for more fuel for the same distance if your car does 8mpg compared to 48mpg.

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  • DrSquirrel

    Simple things like removing VAT from bicycles needs to be introduced.

    I also think this should be the case for healthier foods, and raise duty on “fatty foods”, I like a good snack here and there, but I don't gorge on it every day, so I wouldn't mind the slight raise for the greater good.

    And this is not a “fat tax”, because it's not a tax on fat people… if people are eating too much of these really poor foods… then that is the problem and their choice, hence the tax isn't aimed at them.

    Kind of :p


  • carltonreid

    Speaking as the executive editor of the trade mag I've got to tell you
    that this idea comes up regularly but is always swotted down by the

    Right now – in the UK at least – a lot of folks can buy bikes at a
    discount via the Cycle to Work scheme.

    I understand where you're coming from on the fatty foods tax but,
    sticking to transport, I reckon there's still a lot of wriggle room
    left in vehicle and fuel taxation.

  • Anonymous

    Simple things like removing VAT from bicycles needs to be introduced.nnI also think this should be the case for healthier foods, and raise duty on “fatty foods”, I like a good snack here and there, but I don’t gorge on it every day, so I wouldn’t mind the slight raise for the greater good.nnAnd this is not a “fat tax”, because it’s not a tax on fat people… if people are eating too much of these really poor foods… then that is the problem and their choice, hence the tax isn’t aimed at them.nnKind of :pnnnDrSquirrel

  • carltonreid

    Speaking as the executive editor of the trade mag I’ve got to tell you rnthat this idea comes up regularly but is always swotted down by the rnGovernment.rnrnRight now – in the UK at least – a lot of folks can buy bikes at a rndiscount via the Cycle to Work scheme.rnrnI understand where you’re coming from on the fatty foods tax but, rnsticking to transport, I reckon there’s still a lot of wriggle room rnleft in vehicle and fuel taxation.

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  • Dan

    not quite.nnas said below cyclists do not degrade the road as quickly, or as much.nnwe do have an effect on the road, there for we would pay some costs, nnI tend not to tow a barrow full of tarmac behind my bike, I’m not improving the road surface, why would I be due a rebats?

  • Guest

     I think this is the perfect way forward (well we are already there), and is much better than road pricing schemes (after all the admin, setup costs and all that) and “showroom tax”.

    I even think VED should be removed completely, its totally redundant. We don’t need a tax disc anymore for the police to check if we have insurance/mot, ANPR can handle that automatically. I’d like to see more ANPR and red light cameras over speed cameras.