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A cost-benefit analysis of cars and bicycles

... or the "but cyclists don't pay road tax!" argument

An argument is made by some drivers that their payment of Vehicle Excise Duty (VED, commonly but misleadingly known as 'road tax') entitles them to use the roads, and they propose that cyclists should enjoy no such privilege unless they also pay 'road tax'. A simple comparison of the revenue raised through VED and expenditure on road maintenance reveals the fallacy of this argument. VED revenue in 2004/2005, for example, was £4.7bn (Table 7.15 in DfT 2006, 129) whilst total expenditure on road building and maintenance in England alone in the same period was £6bn (Table 7.13 in DfT 2006, 128). Clearly road maintenance is therefore being subsidised by other forms of taxation in addition to VED, and any driver who argues for a direct link between road use and expenditure is in effect calling for a higher level of road tax.

We must also consider the fact that almost all of the wear and tear done to roads is caused by motor vehicles (Highways Agency 1994), and that a large proportion of the remainder of current road expenditure (for example traffic controls, road widening schemes, town bypasses, and all motorways) is not required by bicycles, pedestrians, horse riders and other non-motorised road users. These are costs which logically should be borne by the motorist alone.

To extend the debate beyond "road tax", it is true that in total motorists pay more than just VED: revenue from fuel duty in 2004/05 was £23bn (Table 7.15 in DfT 2006, 129). Does this additional taxation mean that drivers pay a fair price after all? To make a meaningful comparison, if we take into account these additional taxes on motorists, we must also take into account the wider cost of motor vehicles to the economy as a whole. The economic cost of road accidents, for example, was estimated in 2004 to be some £18bn per year (DfT 2004, 5) and the cost to the British economy of road traffic congestion was estimated to be £20bn, rising to £30bn by 2010 (Goodwin 2004, 2). In 1998 it was calculated that between 12,000 and 24,000 deaths may be may "brought forward" each year in the UK as a result of air pollution, and that between 14,000 and 24,000 hospital admissions annually result from poor air quality (COMEAP 1998), to which road transport is by far the largest single contributor (FoE 1999, 1), and although the resulting economic cost is not estimated it must be considerable. In this light, and without even factoring in the less easily established costs of damage to wildlife, noise pollution, contribution to climate change, and end-of-life disposal of motor vehicles, it is already clear that motorists do not currently pay anything like the full cost of motoring. As the Dresden Technical University study The True Costs of Automobility concludes, "Even if motoring taxes were taken into account there remains a significant shortfall in the UK. Fuel duty and its associated VAT along with vehicle excise duty contribute around £38bn a year to the Treasury's coffers, £10bn less than the estimated cost." (Guardian 2012)

We could attempt to broaden the debate again, and argue that motor vehicles bring wider economic benefits, and that to perform a fair and complete cost-benefit analysis the contribution of motoring to the economy as a whole would have to be factored in. The economic contributions of motoring are both direct (e.g. revenue generated by the motoring industry and associated services), and indirect (such as enabling individuals to work in jobs that would be impossible without a car). However, if these benefits are to be counted then we must also factor in the wider economic disbenefits of car use.

As cars have become more popular, local services have disappeared and are now dispersed over a wider area. The appearance of out-of-town shopping centres, the closure of many small post office branches, and the rise in commuting distances and suburban living are all examples of the type of development which would not have been possible without the car. These developments may be advantageous for some, but they leave those without a car at an ever-greater disadvantage: there is a marked difference in the the reported difficulty of accessing essential local services between households with a car and households without (Chart 46A in Palmer et al 2006: 100).

Let us not fall into the trap of thinking that these households are a small or unimportant minority. Of Great Britain's 59m population, only 33m are licensed drivers (Table 2.3 in DfT 2005b: 11), and when all these who do not drive despite holding a licence– those who are now too elderly, or cannot afford a car, or choose not to drive – are subtracted, it becomes clear that less than half of Britain's population are current drivers. A quarter of all households in Great Britain do not have access to a car at all (Table 5.4(a) in DfT 2005b: 35): this already represents a large number of people who are at precisely this type of disadvantage. But if we look at the demographic breakdown of this group we see a further inequality: women, the elderly, and the poor are worst off. Almost 45% of single parents do not have access to a car, and neither do over 65% of single pensioners (Table 5.3 in DfT 2005b: 35). It would appear that precisely those households with the greatest need of personal transport and assisted mobility in fact have the least access to cars.

Furthermore, even those whom the official figures categorise as having access to a car may not find it fulfils their needs. Although only 12% of households in one study were without any form of access to a car, many of those with one car or more still reported a transport problem: 30% of survey respondents considered lack of access to services to be a serious issue in their lives (Harrop et al 2000: 27). These groups are directly harmed by the very existence of private motoring, without which they could enjoy better local services and better public transport.

Clearly the economic and social benefits of widespread motoring are significantly mitigated if not outweighed by the disbenefits. Despite being funded through general taxation, private car use only serves certain sectors of society, whilst having a negative impact on others. Drivers who advance the argument that cyclists and horse riders should pay road tax risk shooting themselves in the foot: if all road users paid in proportion to the full cost of their chosen method of transport then cars and lorries would be considerably more expensive than is currently the case, and bicycles might even be subsidised.


 

References

DfT (Department for Transport). November 2006. Transport Statistics Great Britain, 2006 Edition. The Stationery Office.

Highways Agency. 1994. Design Manual for roads and Bridges. The Stationery Office.

Goodwin, Phil. May 2004. The Economic Costs of Road Traffic Congestion. ESRC Transport Studies Unit, University College London.

DfT (Department for Transport). 2004. Highways Economics Note No. 1: 2004. Department for Transport.

COMEAP (Great Britain Committee on the Medical Effects of Air Pollutants). January 1998. Holgate, S.T. And Ayres, J.G. (Eds). Quantification of the effects of air pollution on health in the United Kingdom. The Stationery Office.

FoE (Friends of the Earth). 1999. Road Transport, Air Pollution and Health. Briefing Paper.

Palmer, Guy; MacInnes, Tom & Kenway, Peter. 2006. Monitoring poverty and social exclusion 2006. Joseph Rowntree Foundation.

DfT (Department for Transport). (2005b). National Travel Survey: 2005 (Transport Statistics Bulletin). Department for Transport.

Harrop, Andy; Jones, Ken; Kenway, Peter; Palmer, Guy & Smith, Phil. 2000. Changing Views of Rural Britain: Why Services Matter. New Policy Institute.

Guardian 2012. Car pollution, noise and accidents 'cost every EU citizen £600 a year'. Accessed 31/12/2012 guardian.co.uk/world/2012/dec/25/car-pollution-noise-accidents-eu