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Letters: Ringfencing taxes is not the way to boost road spending

“Ring fenced taxation” and “securing a greater proportion of taxpayers’ money for road building” is not the right way to raise more money for roads (NCE 25 October).

Within the current budgetary framework, increasing the £9.4bn road spend by taking more money out of the £35bn taxes specific to road users, simply means taking it away from other sectors. That is why the Treasury always opposes ring fencing.

A better solution, spreading rapidly through other countries, is to legislate and turn the road sector into a public enterprise. Road user charges (the road tariff ) are then set by an independent road fund administration that collects and manages the funds.

It has an oversight board - typically comprising representatives of road users, the business community, academia and concerned ministries - which sets priorities and divides funds between national, urban and local roads. It also audits use of funds.

The road tariff comprises license fees and a fuel levy (some countries, like New Zealand, also use weight-distance charges). Fuel levies would eventually be replaced by electronic charging.

In practical terms, this means converting the current £9.4bn road allocation into license fee income and an initial fuel levy, specified in pence per litre.

The balance of the £35bn remains as a general tax. From the Treasury’s point of view, this arrangement is “revenue neutral.” Extra spending for roads then comes from extra payments by road users who know that 100% of the revenues raised will be spent on roads.

Implementation of works would continue to be carried out by the Highways Agency and local authorities, but subject to more competitive pressure. That is why the above restructuring is usually described in terms of, “bring roads into the market place, put them on a fee-for-service basis and manage them like a business.”

Ian Heggie (M Ret), i.heggie@uku.co.uk

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Antony Oliver’s Comment item in NCE 11 October reviewed all the options for charging, but his heading and final paragraph leant towards road user charging.

Mick Oliver (NCE 25 October) clearly favours taxation, as does Paul McCombie. But the CBI report referred to is surely right to make the comparison with water and rail pricing.

Like water, road space is a scarce resource, and to make best use of it we need to pay for it directly, via a toll system. Fuel tax does not achieve this. Direct charging forces us to value our use, and consider our options.

This might mean using an alternative route, but, as with rail pricing, will also encourage travelling at less congested (and cheaper) times, to the benefit of everyone.

More efficient use of road space would benefit everyone, if prime minister David Cameron can grasp the nettle.

Terry Collins (M), 33 Greenfield Avenue, Dinas Powys CF64 4BX

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