Charge big polluters more under Hong Kong’s electronic road pricing scheme

Loong Tsz-Wai says congestion fees need to vary depending on how green a vehicle is, to account for the social costs of congestion and help persuade more people to use public transport

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Heavy traffic in Central. Private cars carry fewer passengers, and have higher emission rates per capita than public transport. Photo: Sam Tsang

Published: 3:42pm, 15 Mar 2016Updated: 3:42pm, 15 Mar 2016

Congestion is getting worse in Hong Kong. In response, the government is studying a plan for electronic road pricing, and public consultation is ongoing.

Electronic road pricing is an effective way to combat traffic jams, and has been found to be useful in reducing carbon emissions. Yet, the scheme must be carefully designed to fully account for the social costs of congestion.

READ MORE: Electronic road pricing plan for Hong Kong’s Central district slammed by local councillors

In its public engagement document, the government is proposing a scheme that charges vehicles either a one-time fee when they enter the restricted area (an area-based approach), or a fee every time the vehicle passes the boundary of the charging area (a cordon-based approach).

Neither, however, makes distinctions between the different vehicle makes, even though each produces different social and environmental costs.

The amount charged should be related to how polluting the vehicle is, to ensure all road users are charged fairly.

This is similar to a Pigovian tax, named after the economist Arthur Pigou, which is a tax on market activities that generate negative externalities.

The fee should be based on European emission standards: the more pollution produced, the higher the fee.