The fuss about increased charges at toll booths around the country has failed to address a simple question. How should the costs of the road system, including costs imposed on everyone else by road traffic, be recovered?
Should the system of cost recovery include significant charges at a small number of fixed points, only a dozen, on the major road network, with the rest of the network free at the point of use?
There is quite a penalty if you happen to commute along a tolled section.
A trip along the M7 from Portlaoise in the Dublin direction is free, but if you travel a shorter distance along the M4, from Enfield in Co Meath or points further west, you pay twice a day. This looks arbitrary because it is.
Enfield is less than half the distance.
If you travel west from Waterford on the bypass you pay, but there are no tolls on the M9 going north.
At €3 a pop, and for say 200 round-trips per annum which means 400 toll payments, the potential bill for those with a tolled commute can reach €1,200 a year.
The reason you pay on some motorways and not on others is because off-balance-sheet financing was used in their construction, for reasons which made little sense at the time.
Ireland taxes road users for good reasons, but not in a very coherent fashion. Around €4bn per annum has been raised in recent years from purchase taxes on imported vehicles, new or used, on first registration; from the annual charge, commonly called motor tax; and from taxes, including VAT, on auto fuel.
The purchase and annual taxes have become complicated, differentiated according to vehicle type and emissions characteristics. There are all sorts of incentives for electric vehicle adoption, including tax reliefs, generous benefit-in-kind rules where employers provide the cars, and straight grants to new car purchasers.
The fuel tax is more straightforward and, as in most European countries, is pretty steep: more than half what you pay for road fuel at the pump is tax.
It costs serious money to build and maintain roads and to pay for traffic policing.
Emissions and traffic
Road use also creates so-called ‘externalities’, impositions on the community at large arising from road traffic and additional to the direct costs of providing and operating the road system. The main ones are carbon emissions and traffic congestion. All of these costs, direct State expenditure and the externalities, should be reflected in charges on road users and they are, but only in a very haphazard way.
The total impositions on road users annually are very roughly in line with the total direct costs and the carbon emissions element is explicitly identified as an add-on to the fuel excise, called carbon tax. Many climate campaigners believe that this element is too low, and governments have been increasing it steadily in recent years.
Modern vehicles are digitally connected and the technology is available to identify and charge the users who cause congestion
With the sole exception of the Dublin Port Tunnel, there are no taxes for using the roads which attempt to reflect congestion costs. Even here, the peak versus off-peak differential is arbitrary.
But if the total raised is roughly in the right ball-park, at least in so far as the object is to cover direct costs, this is largely by accident. Purchase taxes, and the annual motor tax, are unrelated to usage. Only the fuel tax goes up the more you drive.
The annual charge is payable if you stir out at all – you have the same liability just for owning a vehicle. It would make as much sense to charge people a fixed annual amount for owning a cooker, with free electricity. The once-off purchase tax is payable if you put a new car up on blocks on day one as decoration for the driveway.
A rational system would charge for road use, including the externalities.
Several recent studies, from the Tax Strategy Group in the Department of Finance, the Parliamentary Budget Office and a research group at UCD in a study for the Government, have drawn attention to the switch to electric vehicles and the likely decline in tax revenue.
If Ireland had an all-electric car fleet, the ultimate goal of declared Government policy, there would be a large hole in the public finances, even more so if heavier vehicles can also be weaned off fossil fuels.
An obvious replacement is a system of charging related to congestion, which would be paid mainly by road users in and near the main cities.
Modern vehicles are digitally connected and the technology is available to identify and charge the users who cause congestion.
Several European cities have introduced congestion charging using an old-fashioned technology based on cordon tolling. Dublin politicians are already lining up to resist congestion charging, with no plans to plug the revenue gap.