Crossrail, the scheme to link east and west through rail tunnels under central London, has finally got the go ahead. It won’t be completed until 2017 and is estimated is to cost £16bn, but London will eventually get a significant boost to its public transport capacity.

Crossrail will be funded from a combination of public and private sources. However, funding of the rest of the tube upgrade work is now even more uncertain and there are concerns that some work may be scrapped. Last July one of the two consortia involved in the Public Private Partnership (PPP) project to renew the London Underground collapsed, leaving Transport for London with a hefty bill and Gordon Brown with egg on his face.

Away from London, in Leeds, Liverpool and Portsmouth proposed new tram schemes have been scrapped, partly because projected costs and budgets have escalated and also because of continuing uncertainties about funding.

In short, we have a huge, M25 traffic jam in rush hour-sized, problem. Everybody agrees that we need improvements in public transport, that increasing car usage is simply not sustainable (or environmentally friendly) but nobody is prepared to pay for the desperately needed improvements.

If funding is one of the main impediments to providing a public transport system fit for the 21st century, then perhaps we need to look across the Channel to see why the French have one of the best local transport networks in the world.

In France the most important source of funding for the implementation of local public transport projects is the versement transport, which roughly translates as ‘transport tax’. This tax – dedicated wholly and exclusively to public transport – has no equivalent in Britain.

The VT is an option available to local municipalities interested in generating additional funds for public transport. They do not have to charge this tax. However, when it is charged, the VT is calculated on employees’ wages – their gross salary – but paid only by the employer. Every employer, both public and private, with more than nine employees who is located inside a transport authority may be asked to pay between 0.55 – 1.05% – and slightly more in the Paris region – of its total payroll as VT to the authority.

Studies have confirmed that the VT does not have a significant effect on labour costs, nor on company location. It also has a very limited taxation impact (less than 1 % of the overall French tax burden). This tax levy on companies has become a powerful tool for financing and developing public transport in France. Uptake is high – almost 40% of public transport in France is financed by the VT.

Good transport links have been crucial to the prosperity of the banks, newspapers and financial organisations now based in London Docklands. In the City, the workforce is almost wholly dependent on public transport to get them to and from the office. Many in the City have argued that London could lose its pre-eminent position to Frankfurt if improvements are not made to the transport infrastructure.

Good public transport facilities can improve social mobility, enabling people in poorer areas travel to work in more prosperous parts of their region. The environmental benefits of better public transport, with reduced car usage are clear. Yet much of the present road, rail, tube and bus infrastructure is utterly inadequate for a 21st century city.

The UK, one of the five richest countries in the world, needs its own version of the transport tax. It is time to kick start the investment that is so desperately needed, and ensure that some of the major beneficiaries, employers and businesses, make a real contribution to getting our cities moving again.