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https://nap.nationalacademies.org/catalog/27432/critical-issues-in-transportation-for-2024-and-beyond

THE IMPLICATIONS OF REPLACING A SYSTEM OF FIXED CHARGES FOR ROAD USERS WITH A FUEL LEVY

The study examines the desirability and feasibility of "replacing the present system of motor vehicle registration fees, driver's licence fees and third party insurance for bodily injury and property damage with a levy on the sale of all petroleum products". The major conclusions to be reached from this study are: variable charges (in the form of a fuel levy) imposed by the state government are significantly less than the estimated marginal costs of vehicles using the road system. Third party personal insurance claims are the major contributor to marginal costs. However, commonwealth taxes on fuel, some of which are directed to the road system, and some of which are general revenue are at such a level that private motoring costs are in excess of a true price. Given this, any move by the state government to increase variable charges will further distort the motoring cost position. Unless we can be confident that demand for use of the road system is perfectly inelastic this will result in non optimum use of roads, and a welfare loss to society. Other problems of the market in handling road use (investment decisions, valuation of accident damage, other government taxes) further complicate the picture. The welfare loss will be partially offset by the cost reduction associated with not having to collect the fixed charge. To raise the same revenue as was raised in 1986/87 by the state government through fixed charges, a fuel levy averaging 17 cents per litre would have to be applied. A range of equity considerations arise, some of which require further study. While vehicle classes will pay an amount to government more closely related to the marginal cost they impose, there will be some classes who will pay less (mainly private use) and some who pay substantially more (mainly commercial) than they do currently. Vehicles which travel a greater distance, and those which consume fuel at a greater rate will obviously be report for South Australia. Department of Transport. Disadvantaged relative to current charges. On the basis of the analysis, it is suggested that a fuel levy should not be adopted to replace fixed charges. This suggestion is based on a number of broad assumptions in the analysis and it is recognised that a more detailed examination of some areas may be required to fully support this position. (TRRL)

  • Corporate Authors:

    Centre for South Australian Economic Studies

    Bedford Park, South Australia,   Australia 
  • Authors:
    • Burgan, B
    • Molloy, J
  • Publication Date: 1988-5

Media Info

  • Features: References;
  • Pagination: n.p.

Subject/Index Terms

Filing Info

  • Accession Number: 00499032
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, TRIS, ATRI
  • Created Date: Sep 30 1990 12:00AM