State and local government are normally largely involved in financing and operation, because public transport is often an unprofitable business activity nowadays. This has been motivated by declining average cost arguments, social considerations and the desire to offer an alternative to private car use. Conventional sources of funding, including general taxes on labour, in many occasions have become harder to sustain for various reasons. This paper explores alternative, increasingly implemented, sources of funding, namely local charges or taxes (such as local sales taxes, parking charges, etcetera) that are hypothecated to support (urban) public transport. Based on an overview of several case studies all over the world, it is found that there is potential for applying unconventional charging mechanisms. Not only as a means of raising financial support for public transport systems, but also as a method of sending appropriate (from a sustainable point of view) pricing signals to transport use. However, the majority of existing unconventional measures have evolved without reference to guiding principles of public finance. Most have been developed simply in order to generate funds to support public transport. (A)
Abstract