Road charges, fuel duty and satellites

Economists will be in favour of road users paying what it costs to use their car – including the costs of pollution, other damage to the environment, and congestion. So I am broadly sympathetic to Alastair Darling’s proposals to charge road users. But I don’t understand why it isn’t simpler and less bureaucratic just to put up road fuel duty? (I would abolish the Vehicle Excise Duty at the same time.) Fuel consumption isn’t an exact measure of the full cost of a mile driven, but it must be a pretty good approximation. Are there really big enough benefits from using a satellite tracking system to charge by the mile, instead of charging per gallon of petrol used, to justify the huge cost?

1 thought on “Road charges, fuel duty and satellites”

  1. Differential pricing at different times of day, i.e. it will be more expensive to travel near a city at rush hour than in on the open road in the middle of the night. Whether that’s enough to justify the tracking and so on, I’m not sure.

    Owen adds:Sure. But presumably you burn more fuel per mile in congestion than on the open road? I would guess that charging per litre of fuel would be a more accurate proxy for congestion than changing price according to the time of day?

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