What are the problems with existing taxes on road transport? Do they already internalise external costs?
Existing taxes internalise only partially and inefficiently external costs from road traffic. The tax structure is inadequately related to the main costs drivers of pollution and congestion. Levels of vehicle tax are unrelated to how often the vehicle is used. Fuel taxes are the same for heavily polluting vehicles as for “greener” ones and do not distinguish between rush hour and off-peak use. Efficient charges should vary according to the type of vehicle, the distance and the congestion levels.
