Road pricing refers to the direct charging of a price for the use of roads. This contrasts with road taxes such as vehicle registration and fuel excise, where charges are applied for vehicle ownership and fuel consumption. The basic economic principle is that consumers demand more goods and services with limited resources to meet their needs and wants. Thus leading to scarcity, in order to understand scarcity, consumers are forced to give up a good, which leads them to opportunity cost. Need for competitive neutrality between land transport modes, the PAYGO system, in relation to rail access charges, creates an effective subsidy for heavy goods vehicles. Rail access fares are determined on a full cost recovery basis, unlike the PAYGO system. This puts rail at a competitive disadvantage by increasing its operating costs. This competitive disadvantage is best demonstrated by the breakdown of road and rail costs. Rail enjoys a significant cost advantage in all major interstate containerized freight movements. However, this cost advantage of rail is offset by the significant differences between track access charges and road charges. This results in a cost disparity, with rail service providers having to spend up to a certain percentage of their operating costs on rail access charges, while HGV operators only spend 5% of the total cost on charges. road. Current road tax arrangements will not meet a country's future transportation challenges. Poorly functioning road networks harm the amenity, sustainability, quality of life and productivity of society. Moving from indiscriminate taxes to efficient pricing would allow a country to leverage the value of its existing transport infrastructure. Less congestion......middle of paper......result of passenger and freight movement. The lack of preserved transportation corridors has necessitated the adoption of more complex solutions such as tunnels and bridges to accommodate new road infrastructure. These solutions are prohibitively expensive, complex, and not viable as a widely used solution. The induced demand for road use further limits the effectiveness of increasing road supply. The concept of induced demand refers to the idea that new provision of road infrastructure will actually encourage increased demand beyond existing demand for road use. In the country (Australia), per capita car ownership and use has increased with the increase in the provision of road infrastructure over the past 20 years, thanks to government programs that have provided higher levels of funding unprecedented in road infrastructure.