ERP or Electronic Road Pricing is a mechanism presently used in a number of countries that charge motorists a certain amount for passing a particular road at a particular hour. It is similar to a toll fee, but pricing is determined primarily by “congestion” and time of use. The fee is higher when one chooses to pass a main road at “peak” hours.
For example, in the case of EDSA, with an ERP system, each motorist passing this main highway will be made to pay a fee or charge of, say, P50 if they go through in the hours of 6-9 a.m., and 5-9 p.m. Outside these hours, there won’t be any charges. This is to encourage motorists to seek alternate routes during peak hours, to decongest EDSA. Simply put, ERP is usage-based taxation. Motorists will be taxed for using a particular road at a particular time. This “usage” tax may be likened to the consumption tax or excise tax that Filipinos currently pay for buying or using oil or fuel, automobiles, jewelry, cigarettes and other tobacco products, and beer and other alcoholic drinks.
One argument against ERP is that other than having already paid income taxes to help pay for building more public roads, the government will also charge people for using that road. This is an addition to the various “taxes” or fees people already pay for buying and using cars, like the excise tax on cars as well as the road user’s tax or motor vehicle user’s charge.
In the case of Singapore, where ERP has been in place since 1998, the system is said to have helped manage vehicular traffic in the city state — although various studies available to the public indicate mixed results. In my opinion, however, if the system does not work, then the Singapore government would not have kept it in place for over 20 years now.
I first saw the ERP at work in its early years, during an observation tour hosted by the Singapore government. Back then, I recall having written about the positive attributes system for this paper. But now that there is talk that something similar to ERP may be introduced here, particularly on EDSA, I cannot help but think that local enthusiasm for ERP may be misplaced.
I believe that the ERP works for Singapore for a number of reasons. One, Singapore is good at planning and implementing. Two, they have reliable government systems. Three, their people are accustomed to conforming with government regulations. Four, they effectively fight government corruption. And five, they have reliable, efficient, and comfortable public transportation.
These, I believe, are important factors that helped make the ERP a “success” in Singapore. However, I believe these factors or necessary elements are not present here. For instance, there is much left to be desired as far as our public transportation system is concerned. If only efficient and comfortable light rail and rapid bus transits were available here, people would surely opt to leave their cars at home, and effectively decongest our roads.
The Singapore ERP is now fully automated, using computer algorithms that take into account a number of factors in determining the price of passage at particular hours. It reportedly uses historical traffic data and real-time feeds with flow conditions from several sources to predict the levels of congestion up to an hour in advance. They determine road pricing by estimating prevailing and emerging traffic conditions. The ERP system is also integrated with all other traffic systems that are in place.
Vehicles have RFID units similar to those now in use in our tollways to automatically debit road charges from motorists as they pass certain roads. In short, without these RFID modules, one cannot go through roads where ERP is in effect. Pricing is variable, and changes depending on traffic volume and flow.
Singapore implemented a comprehensive effort, with ERP as just one of the tools, to better manage vehicular traffic on the city-island-state. Other than ERP, which “taxes” roads use, Singapore also reduced vehicle ownership taxes; automated the ERP system and adjusted ERP rates depending on vehicle speed; set equitable road use prices that take into account vehicle size (bigger vehicles pay more); and, most important, continue to make improvements in public transportation.
Locally, for policymakers who are now contemplating the use of the ERP system for EDSA and other main roads in Metro Manila, what are the other elements of their comprehensive traffic masterplan? Are they looking into ERP as just a one-off effort, or will it be part of a bigger plan to fully automate and link all existing traffic systems and introduce other reforms in taxes and registration? What further improvements will be done in the public transportation system?
Already, we have our hands full grappling with issues involving motorcycle taxis. Previously, it was an issue over transport networks Uber and Grab. Our bus system is still problematic, and even our taxis leave much to be desired. We are still in a quagmire with jeepneys and tricycles, and our light rail transit is still not 100% efficient and reliable.
By taxing road use through ERP, without complementing initiatives to encourage mass transit use and to implement a comprehensive traffic masterplan, then the ERP will just be an additional burden for private motorists and public transportation operators (for they will not be exempted). Yes, the government can expect to collect fees in the billions of pesos. But other than additional government revenues, the ERP will not achieve any of the intended results with respect to congestion.
At the onset, perhaps it can make a difference. However, once people get used to the system, then its benefits will dwindle. Then people can expect periodic increases in road pricing. Remember how cigarettes taxes have to be increased periodically to sustain its impact on cigarette consumption? Expect the same from a local ERP initiative.
Moreover, ERP might simply displace or distribute the problem rather than solve it. In the case of EDSA, with ERP in place, motorists may opt for alternative routes which will just congest roads other than EDSA. So, while EDSA traffic moves faster, the rest of the metropolis is gridlocked. Ultimately, that gridlock will also spill over to EDSA since there is just nowhere else to go.
The government cannot keep building more roads. Land is a finite resource, and we can allocate only so much land or real estate for public works or road use. Motor vehicle ownership will also continue to increase over time. Road pricing is only as effective as other measures that are implemented along with it to tackle this complex problem. Efficient, comfortable, affordable, and cost-effective mass transit still remains to be the most viable solution to the problem of congestion. Without it, road pricing cannot be effectively and equitable implemented.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
