Vertical Equity Legal Definition

Market fairness in road pricing is achieved when the price charged to each individual or group is directly proportional to the costs and benefits received by the individual or group. An example of market fairness in road charges would be to set a congestion charge for a driver entering a congested area at a given time, exactly equal to the cost of the induced delay that the driver imposed on other drivers – since the time limit imposed would vary according to the degree of congestion, the price would vary accordingly. Market justice is a type of horizontal equity because it does not take into account the resources, class, etc. of individuals – everyone pays the same market-based interest rate. Tax breaks and deductions can somewhat distort the concept of vertical fairness, as they can reduce your tax liability. You and your neighbour can pay the same tax rate, even if they earn $15,000 more per year than you. If they qualify for additional tax deductions and use them, they may be able to eliminate that $15,000 difference by subtracting the available deductions. „Effects of concern” refers to changes in the lives of the travelling public (broken down by categories or units of analysis) caused by the transportation project and for which equity effects are observed. Three main groups of worrisome impacts are observed in road pricing projects: In order to be able to compare equity discussions from one project to another, the effects must be measured in units to compare projects of different sizes, passenger use, etc. These measures can be taken per inhabitant, per vehicle-kilometre, per journey, etc. For example, with respect to „social inequality”, the measure to assess the impact on equity between an electric vehicle and a carbon-fuelled vehicle could result in the monetary value of taxes paid by one relative to the other. Alternatively, it could be extrapolated to the number of kilometers driven per charge to show the social inequality between a plug-in hybrid and a vehicle compared to a conventional vehicle.

In both examples, comparative measures must be comparative to show the degree of social inequality of one case relative to another. Both the concepts of justice and equality are about equity. However, they are very different in their approaches to achieving equity. Section 3.0 provides a comprehensive definition of congestion and equity in road use and describes the elements or factors that should be considered when assessing the impact of road pricing projects on communities and transportation system users. These different types of equity overlap and often conflict. For example, horizontal justice requires users to bear the costs of their transport facilities and services, but vertical justice often requires subsidies for disadvantaged people. Transportation planning often involves trade-offs between different equity objectives. Local and state government officials will want to understand justice considerations so they can explain to the public the justice issues surrounding a particular street pricing project.

Non-users are potentially important in terms of impact on equity. Affected non-users include travellers using nearby free facilities, residents and business owners along the pay facility, residents and business owners of adjacent facilities, current transit drivers who may be affected by more transit drivers, and improved transit service. etc. User costs and benefits include advance pricing for road users who benefit from a road charging project and users of the initial charging scheme who may not benefit from a road charging project and therefore may not be able to continue using the road at times of their choice. Horizontal justice states that those who earn about the same should be taxed at about the same rate, while vertical justice states that those who earn more should be taxed more than those who earn less. It is much easier to implement the concept of vertical justice in income taxes than in capital taxes. This is because income is liquid while assets are not. Some assets can be monetized, at least to some extent. For example, you might be able to rent a room in your home. Vertical equity is generally measured in terms of interest groups grouped by income or social class: lower income groups should bear fewer costs and/or obtain more benefits than higher income groups.

An alternative application of vertical justice is achieved by grouping actors according to needs and mobility capacities. This demand essentially indicates that those most in need of mobility and/or least able to access transportation should receive the most benefits and/or pay the least for a transportation project. By grouping stakeholders according to mobility needs and capabilities, equity measures the extent to which the transportation system meets the needs of passengers with specific disabilities and is often used to justify para-transit services. This can be compared to horizontal equity, where people with similar incomes and assets would have to pay the same amount of tax. As noted above, the two scenarios described in Section 2.0 are used in the other sections of this report to demonstrate new concepts and guidelines. These scenarios are intended to be illustrative rather than complete. Each scenario will likely need to consider several types of actions. The main scope of a stock valuation is its category or unit of analysis, the grouping of people for whom equity is analyzed. Typical units of analysis of equity are geographic, stakeholder groups and individuals.

Among these units, stakeholder groups are among the most frequently analyzed in the road justice literature.

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