This is a complex problem, not as simple as put up pricing mechanism and we would be happy about it kind of things.
PAP govt is using conventional economic theories in its implementation of BOTH the COE and ERP. COE is the "entry fee" concpet, while "ERP" is differential pricing. These concepts are used for maximizing profits for private companies, for example, of running a carnival fair.
The aim of the govt is not about "profit maximization"; but instead, achieving social goals and objectives. this question involves alot of complex views but I will just put up simple propositions.
1) I think I am one of the earliest critic of the present bidding system; I reasoned that such bidding system is both inefficient and ineffective, but only serves to maximize "monopoly profits" received by the govt. A most efficient way to curb the "monopoly" power of the govt is to have the closed bidding system, pay as you bid but at the same time, creaming away the top 1% or 0.5% high bidders. I am not going to elaborate how this will work as an efficient system of bidding as it involves quite a bit of complex economic cum psychology views.
2) The system of ERP is NOT efficient at all, when demand of usage overwhelmed supply. The only way of "effective" pricing is to open up some routes that are totally FREE for cars to go into the city area, while remaining highways are kept at the pricing state. The primary aim of the pricing mechanism is NOT to maximize monopoly profits of the road supplier, govt, but to efficiently and effectively differentiate between "productive users" and "less productive" users. This concept involves alot of economic theories, I shall not elaborate furthermore.
3) If road tax is deemed as ineffective as comparedto COE bidding, why keep it?
4) There are other ways of solving the congestion problems in the long term which I have advocated in scs before. But this will affect alot of "big boys" in the commercial property market as well as public transport providers. There are two spectrums in the problem, mainly a relatively inefficient public transport system, and the redistribution of the overly concentrated economic/finance activities in the CBD areas.
5) A total liberalization of the public transport system is needed to solve these problems. They have implemented part of my earlier suggestions, to provide special "express" bus services from middle class clusters of residential areas to CBD. But they only provide it during peak hours, which is not what I intended to have. A better understanding of the benefits of a liberalized public transport system is to make good study of Hong Kong's public transport system. I shall not elaborate further.
6) To reduce the demands of road and thus, reducing the congestions in major roads to CBD will require us to use both social transformation as well as information technology. This sound strange right? Well, it is important for us to reduce the demand of having to do everything physically at govt offices. And even so, shift these fovt offices out of the CBD areas! REdistribute them to sub centres like Tampines, Toa Payoh, Ang Mo Kio, Woodlands etc. This will reduce the "peak demand" at the "peak hours". Financial centres should be shifted out of the CBD areas. IN Hong Kong, different district will have their own district and high courts, unlike in Singapore, it concentrates in the CBD. A decentralization program would be needed, with the supplement of Information Technologies in networking them together. I shall not elaborate further. Initially, I thought the govt is going to take up my suggestions made here when it starts to build alternative financial centres in Tampines. But alas, I think there are great resistance to such changes due to enormous vested interests of those property owners in CBD areas, I guess.
Goh Meng Seng
MRT to Shenton Way