Complementing Distance based Charges with Discounted Registration Fees in the Reform of Road User Charges: the Impact for Motorists and Government Revenue

06 July 2016

The call for a congestion charge is getting louder and more frequent in many countries as major metropolitan areas experience increasing levels of road congestion. This is often accompanied by a recognition that governments need to find new sources of revenue to maintain existing road networks and to invest in new transport infrastructure. Although reform of road pricing is almost certain to occur at some time in the future in a number of countries, a key challenge is in selling the idea to the community of road users as well as a whole raft of interest groups that influence the views of society and politicians. Simply announcing a need for a congestion charge (often misleadingly called a tax) does little to progress the reform agenda. What is required is a carefully structured demonstration of what might be done to progressively introduce adjustments in road user charges that are seen as reducing the costs to motorists while ensuring no loss of revenue to government. In this paper we show, in the context of Sydney (Australia), that this can be achieved by the reform of registration fees in the presence of a distance-based charging regime that can deliver financial gains to motorists, with prospects of revenue growth to the State Treasury.