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Topic - Save money and the environment - criticisms please

crossdressingrodney - on 10 Feb 2010
Here's my suggestion: scrap the road tax and add ~10p/litre to the price of petrol.

Advantages:

1: the precise increase in petrol price should be set so that the average driver, if he doesn't change his driving habits, will neither gain nor lose under the new system, so this should not be viewed as a tax.

2: the cost of buying a road-worthy car will be lower, which should allow more poor people to use cars, and enjoy the freedom that car-owning brings. Also poor car-owners, who drive less than the average driver, will see their costs go down.

3: the marginal cost of driving will be higher; that is, the cost of driving each mile is higher. Therefore people have a stronger incentive to look for alternative modes of transport for each journey. In addition to the obvious environmental payoffs for everyone, for each car-mile you forego, you not only save the petrol costs, but you save a portion of your road tax too.

Suppose I want to visit my mum, who lives a 200 miles train ride away from me. I would prefer to take the train if it were not more expensive than the petrol costs of driving. Effectively, this new system allows me to say: 'OK, I'll pay a little more by using the train for this journey, but in return the government should pay back a portion of my road tax'. So although the price of public transport remains the same, switching from the car to the train or bus becomes more attractive.

4: the increase in fuel duty costs nothing to implement, and the government saves money on the administration costs of the road tax.

5: the efficiency of the car is taken into account, since you pay for the amount of fuel you burn, so the incentives due to the current banding of road tax are preserved.

6: We all have slightly less paperwork to fill in, and it becomes much harder for criminals to avoid paying road tax.

Objections to the idea:

1: Overall costs will increase for those who drive more than average.

This is true but not unfair. People must pay the true costs of driving, and this should include pollution and CO2 costs. From another point of view, this policy would offer incentives to live nearer to your place of work, to use public transport more, and for businesses to find ways to reduce the amount of fuel they burn.

2: If it becomes cheaper to get a car on the road, then perhaps the environmental savings made by encouraging current drivers to drive less are offset by the number of new drivers.

Even if this is true (and it might well be), the payoff would be in greater equality, allowing more poor people the freedom of movement a car brings, while encouraging the most heavy polluters to cut on emissions.

3: This doesn't go far enough! Removing road tax and adding 10p to the price of fuel is a good start, but we need to marginalise other costs too, like insurance.

Most of the advantages listed above would apply to offering insurance policies over the counter at the petrol station that only cover your car until you next fill it with fuel. But this would require some changes in infrastructure which need to be costed out, and might also require incentives for insurance companies to comply with a more complicated system.

.....

So that's the idea. Your thoughts and criticism would be very welcome!
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