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 It was later withdrawn following complaints from motorists (the Netherlands isn’t just a country of bicyclists, it has a severely congested road network).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.
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 iPayRoadTax.com, 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!”