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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 Sources. Government Contribution. Private Investors.
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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 Sources . Government Contribution Private Investors Private Lenders Available Transport Finance Users Beneficiaries Citizens
How the Private Sector Contributes . users Fare and Tolls Transport Expenditure Charges beneficiaries Transport Funds Hypothecation Transport Tax Government General Funds citizens Other Taxes Other Expenditure
As an asideThe 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.
Do passengers pay enough Fares on the Transit System
Do Road Users Pay Enough • 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.) • Much of the European toll road network has been substantially financed by the public sector on the basis of the tolls raised. • Can tolls be charged on existing facilities?
Are the benefits to non-users properly captured? • In UK, charge made on new development – fair and proportionate to the additional costs created by the development. This revenue is hypothecated. • Some attempts made, with new infrastructure, to relate to the benefit received (ie distance from station). • Benefits to existing population from new infrastructure largely uncaptured. • Some experience with differential property tax (eg versement in Paris) and special levy (additional charge on the uniform business rate for Crossrail in London).
Other Potential Fund Raisers • Congestion Charge: • London Charge raises more than $200 m pa • Politically unacceptable across the rest of the UK • Parking Levy seems easier to introduce
And so ? • Transport Funding should come directly from the user as well as from government subsidy. Are users paying enough? • 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? • Transport related charges (eg congestion funding/green taxes) can be politically acceptable. These funds are far more useful if they are not hypothecated.
