Transcript FUNDING THE GAP Making the Beneficiaries Pay Charles Russell Steer Davies Gleave

FUNDING THE GAP
Making the Beneficiaries Pay
Charles Russell
Steer Davies Gleave
4 June 2008
4th June, 2008
Steer Davies Gleave
28-32 Upper Ground
London, SE1 9PD
+44 (0)20 7919 8500
www.steerdaviesgleave.com
Funding the Gap: Making the Beneficiaries Pay
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Funding Sources
.
Government Contribution
Private
Investors
Users
Available Transport
Finance
Beneficiaries
Funding the Gap: Making the Beneficiaries Pay
Private
Lenders
Citizens
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How the Private Sector Contributes
.
users
Fare and Tolls
Transport Expenditure
Charges
Hypothecation
beneficiaries
Transport
Tax
Government
citizens
Other Taxes
Funding the Gap: Making the Beneficiaries Pay
Transport
Funds
General
Funds
Other Expenditure
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As an aside
The Risks of Hypothecation
Gordon Brown: Budget Statement 2002
The NHS has always been and will continue to be funded in part from
NICs. But the Government does not support the hypothecation of
revenues to the NHS or other public services, since it would make
public services subject to the ups and downs of the economic cycle
and unpredictable changes in revenues. It would not provide what the
NHS needs: a sound long-term and sustainable stream of funding.
Explicit reliance on Transport Tax for Transport limits flexibility
Earmarking (at whatever level of government) should follow
efficient economics rather than short term political needs.
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Do passengers pay enough
Fares on the Transit System
Monthly Season
Bus
Metro
Expenditure on
PT as % Income
New York
£40.51
£40.51
2.1%
Paris
£35.30
£35.30
2.1%
London
£51.90
£85.30
3.3%
Funding the Gap: Making the Beneficiaries Pay
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Do Road Users Pay Enough
Ι Average Road Toll Rates across USA: $0.09 / mile
( wide range :
Garden State Parkway $0.02-0.04
New concessions (eg Chicago Skyway) rising
to $0.10- 0.15/ mile)
Common European Toll Levels: $0.16-0.20/ mile
( M6 Toll, Birmingham, England: $0.25/mile)
(European road tolls attract sales tax – and drivers pay significant tax
on gas and on vehicle registration.)
Ι Much of the European toll road network has been substantially
financed by the public sector on the basis of the tolls raised.
Ι Can tolls be charged on existing facilities?
Funding the Gap: Making the Beneficiaries Pay
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Are the benefits to non-users properly captured?
Ι In UK, charge made on new development – fair and proportionate to
the additional costs created by the development. This revenue is
hypothecated.
Ι Some attempts made, with new infrastructure, to relate to the
benefit received (ie distance from station).
Ι Benefits to existing population from new infrastructure largely
uncaptured.
Ι Some experience with differential property tax (eg versement in
Paris) and special levy (additional charge on the uniform business rate
for Crossrail in London).
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Other Potential Fund Raisers
Ι Congestion Charge:
■ London Charge raises more than $200 m pa
■ Politically unacceptable across the rest of the UK
■ Parking Levy seems easier to introduce
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And so ?
Ι Transport Funding should come directly from the user as well
as from government subsidy. Are users paying enough?
Ι Many other residents, employees and employers benefit
indirectly from the transport system. There are devices for
raising funds from new development – but how can we target
other beneficiaries?
Ι Transport related charges (eg congestion funding/green taxes)
can be politically acceptable. These funds are far more useful
if they are not hypothecated.
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Thank you
Funding the Gap: Making the Beneficiaries Pay
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