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vehicle operations is only a very small proportion of the total production costs ofindustry. The relevant figures are illustrated in Figure 9.2. The Trucking IndustryStudy therefore concluded that even quite large changes in taxation would beunlikely to have a very big impact on the volume of goods vehicle traffic. It was alsoconcluded that, for the same reasons, that increases in goods vehicle taxation wasunlikely to have a significant impact on industry production costs.FIGURE 9.2: TRUCKING COSTS IN HONG KONG INDUSTRYTaxes$0.4 billion10%$432b.mon ___ ^bffllon ' $a?b5on^1% 90%TOTALINDUSTRYTRUCKINGINDUSTRY1981 Dollars9.10.6 However, not all goods vehicles are used for the sole purpose of transporting goods.It has been noted that following the increases in private car taxation in the early1980s, there was a switch from registering light vans as private cars to registeringthem as goods vehicles. Vans currently make up about half the goods vehicle fleetand it is suspected that a significant proportion are used solely for private purposesor at least only incidentally as goods carriers. Increases in goods vehicle taxationshould have a large impact on these vehicles and should control their future growth.A further reason for higher taxes on medium and heavy goods vehicles is to obtain abigger contribution to the costs of road repair and provision. It is estimated that 80%of road maintenance costs and 15% of road construction costs can be attributable toheavy vehicles.9.11 Package 4: Area Pricing9.11.1 The disadvantage of all the traffic demand management options so far examined isthat they are non-selective, affecting the use of relatively uncongested roads as wellas the busiest roads. Area pricing offers a way of being far more selective in trafficcontrols permitting wider vehicle ownership and making better use of the Territory'sroad system.9.11.2 This policy option was evaluated by testing one of the road pricing schemesexamined in the 1985 Electronic Road Pricing (ERP) Study. This envisaged cordonsset up around and within the main urban area with charges levied on all vehiclescrossing the cordon. The scheme calls for automatic identification and charging ofvehicles by means of electronic detection. Monthly road charge bills would be sentto motorists in much the same way as utility bills. Charges could vary by time of day,ranging from peak charges at the busiest times to no charges at all during the nightand on Sundays.187