Tax or Toll?

Abstract

As user charging increasingly supplements taxation as a transport financing mechanism worldwide, the need to measure and understand its distributional impacts across affected groups grows more critical. The case of the 185-km Gauteng Freeway Improvement Project in the Johannesburg–Pretoria area of South Africa offers an opportunity to empirically examine the equity impacts of large-scale road pricing in middle-income countries. The paper reports on the novel use of GPS data from multiple sources to assess the distribution of benefits and costs of electronic tolling across passenger and freight users. GPS data from commercial truck fleets are combined with multiday GPS tracks from a panel of private vehicle drivers to derive measures of user benefit by class. Compared with an alternative hypothecated fuel tax, electronic tolling is more progressive in regard to income and vehicle class because such tolling transfers costs from private to commercial vehicles, in line with the greater pavement damage caused by trucks. Time-of-day discounts favoring commercial vehicles suggests that the injudicious application of discounts and exemptions can distort rather than enhance equity in road pricing projects.