Introductory Microeconomics

1617 Words Jan 16th, 2018 6 Pages
The Institute for Fiscal Reports has recommended a move for widespread system of the road pricing. As the topic says "The economic rationale for road pricing is compelling" and the revenues generated through road pricing could be used for reducing other motoring taxes. The relevant microeconomics theory, the key factors involved and supportive analysis through diagrams is explained in the following paragraphs.
"The IFS argues that there is a compelling case for making a switch from motoring taxes to a system of national road pricing. Such a shift would be highly controversial, could be used to encourage drivers to avoid busiest times and routes by varying the amount charged for making journeys" (Morris 2012). The IFS has released several factors that will get involved once the road pricing will be introduced. The amount collected from road tax and fuel duties will decline in the next 15 to 20 years; this is because more fuel-efficient cars would have been introduced. The fuel duties will increase from 23% to 50% and they will not be particularly palatable. Once the tax will be raised, the road use will be more sustainable. Annually the distance travelled in the entire Britain is 321 billion miles. The IFS has released a forecast that it will increase to 396 billion in the next 18…

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