OECD keen on road tolls, congestion charging, taxing work parking spaces

Drivers should be paying more, according to the OECD.
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Drivers should be paying more, according to the OECD.

The OECD is keen on more road tolls, the introduction of congestion charges and the end of tax breaks for company cars and carparks. It's not keen on diesel.

Better mechanisms were needed to manage transport demand, particularly in Auckland where congestion levels were high, the organisation said in an environmental performance review of New Zealand published on Tuesday.

It recommended the removal of barriers to road pricing, such as tolls and congestion charging.

At the release of the review in Wellington, OECD environmental director Simon Upton said Auckland lacked access to the full suite of tools that could back up what it might want to do in terms of "spatial coherence".

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An example was road pricing, "which seems to me to be a crucial thing".

Such tools would be needed to change the mode of transport people used, the density of traffic, and people's behaviour.

"So one of the things we say is the Government really needs to look at the extent to which it's limiting the access to some of those tools."

The report said road pricing . . . combined with better mass transit service would help improve efficiency of the transport network, while reducing GHG (greenhouse gas) emissions and air pollution.

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"Charging tolls on major routes can also encourage more compact urban development by creating incentives for residents to relocate into the city or close to employment."

Many cities in the OECD used revenue from road tolls to finance public transport, the report said.

Road pricing is limited to three roads in New Zealand, with revenue raised covering 5 per cent of the cost of road infrastructure. Legislation will be needed before tolls can be introduced on existing roads.

Heavy reliance of private motor vehicles resulted in air quality falling below required standards in areas close to highways and arterial roads, the report said. Transport-related energy use and GHG emissions were rising.

The price of petrol and the tax rate on it were low in New Zealand by international standards, while the gap for diesel was even greater.

Government charges favoured diesel over petrol but that was not justified from an environmental perspective. Diesel had a higher carbon content per litre and diesel cars were generally considered to have worse local air pollution effects than petrol.

"There is no environmental case at all for giving a break to diesel," Upton said. "It should probably be taxed more heavily."

The report said revenue raised by the fuel excise duty and by road user charges on diesel vehicles was mostly spent on the roading network but environmental impacts of road transport were not factored into costs.

Benefits from the personal use of company cars were taxed favourably, although that also happened in many OECD countries. Company car parks were not considered as taxable income, lowering the cost of driving to work.

In contrast, public transport expenses paid by employers were considered fully as workers' taxable income.

"In addition to be a cost for the public budget, the favourable tax treatment of company cars and parking lots tend to encourage private car use, long-distance commuting and urban sprawl," the OECD said.

The tax system for company cars and parking spaces should be reconsidered.

 - Stuff

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