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Restraining auto use: public transport tax incentives 

by Oct 20, 2016Bicycling

Whenever a car advertisement is shown on TV there is always an open roadway with no other vehicle nearby. In reality, when the new car leaves the showroom, it immediately enters a congested roadway. When an architect prepares a 3-D animation of his building design, there are just four or five cars in the planned carpark. The reality is that there are hardly ever enough carpark spaces provided!

If we do not act on time to prevent the explosion in numbers of personal vehicles, they will clog the roadways, and make our urban areas unliveable.

Globally, cities are using a combination of strategies. They are making car parking prohibitive; adding high premium to car ownership; exacting dues for entering prime busy areas; setting vehicle quotas, allowing only a fraction of them on roads at a time; or just not allowing them in the city centre. They are also giving people more options to cars.

The call of the hour is to limit car infrastructure and augment public transport. For instance, cities like Tokyo in Japan have restricted car infrastructure in terms of roads and parking facilities but have good public transport connectivity. 

Limiting infrastructure for cars will be crucial. For example, in Singapore despite stringent pricing and restrictive measures on car ownership, car modal share is high. Once the car is bought and good car infrastructure is available, there is insignificant shift from cars to public transport for daily travel.

In urban areas, they is need for support and scaling up of sustainable modes of public transport, walking and cycling as effective alternatives to personal autos. We need to discourage short distance car travels that can be easily substituted by walking, cycling and use of paratransit.

Liveable cities have done enough to protect and promote compact and dense city design to reduce dependence on cars. They have disempowered the car by removing its privileges. An important way of doing this will be to give priority access to walking, cycling and public transport.

Urban transport congestion arises from the fact that a lot of people want to reach same place at the same time, and in their own vehicles.

A Ride and Save System was recommended in the Proceedings of the Urban Mobility India Conference and Expo 2015. It suggested that the Ride and Save System, if implemented, would not only benefit the lower middle class but also cater to upper middle group of the community. The proposed system can be implemented with a common mobility card. This card has to be a photo ID Card linked with PAN (Permanent Account Number) number [issued by the Indian Income Tax Department] and would be a common public transport card which can be used in all public transport modes available in the city

(metro/bus/ local train). At the time of the annual income tax return, all the expenditure made on public transport can be accessed to take a tax rebate. Taxi and Auto can also be included in the incentive scheme with varying percentage of rebate. 

They claim that the overall benefits of the Ride and Save System are as follows: 

  • Efficiency – an incentive will be effective where it encourages or can be targeted to encourage a modal shift from private to public transport. The incentive can be variable, high in peak hours on week days and low in lean hours and weekends. 
  • Visibility – an incentive will be visible when commuters are aware of the incentive each time they travel from home to work using public transport. 
  • Equity – an incentive will be equitable when it delivers a consistent benefit to commuters regardless of the income level. 
  • Simplicity – an incentive will be simple when it is administratively easy to deliver (from a government or employer perspective) and to receive (from a commuter perspective).

The Proceedings also gave some international experiences public transport tax incentives:

  • Australia. The policy recommends the following reform measures for the taxation of passenger transport: (a) The provision of tax-free fringe benefits for commuting costs, applicable to public transport fares and park-andride costs. (b) Tax incentives for employers (i) in CBD areas offering flexible work hours and (ii) in decentralised areas offering public transport incentives. 
  • Ireland (a) The Tax Saver Commuter Ticket Scheme was established in Ireland in 2000 as an incentive for workers in some parts of the country to use public transport. (b) The scheme is not confined to state-owned forms of public transport and can include private operators if they are approved transport providers. (c) This incentive is seen as a positive way to encourage more people to avail of public transport in Ireland and to reduce traffic congestion. (d) The employers and employees participating in the scheme sign a contract with each other agreeing to participate. (e) Employees can save up to 52% of travel costs as a result of tax. 

Instead of laying congestion charges on private modes why not incentivize public transport—by making expenses on public transport as tax-free.