This paper explores ways of making transport pricing systems fairer and more efficient, by giving users and manufacturers incentives to adjust their transport behaviour. The aim is to: (1) reduce congestion, accidents, and environmental problems; and (2) decrease the real costs of transport, both costs to individual users and costs to other people and society as a whole. The paper concentrates on road transport, because the available evidence suggests that existing road taxation is much less than the total costs of congestion, accidents, air pollution, and noise. Prices paid for individual journeys should be closer to their real costs; this implies a need for more differentiation. Ideally, the relation between charges and costs should be published. Price signals should be used to reduce congestion, accidents, and pollution. In the long run, electronic road pricing could provide a system meeting these needs, while respecting individual privacy, but it will probably take at least a decade to introduce. It would significantly reduce transport problems. Given the severity of existing transport problems, action cannot be delayed.
Abstract