The cross-party Transport Committee published a report (04/02) concluding that there is ‘no viable alternative’ to road pricing and calls on the Government to act now to avoid a £35bn fiscal black hole.
You can read the report in full here, but please see below for a summary of key points.
- Fuel duty and vehicle excise duty raise some £35 billion a year. Approximately 20% of that revenue is disbursed on maintaining and developing the roads. Neither fuel duty nor vehicle excise duty are currently levied on electric vehicles. The Government is phasing out the sale of petrol and diesel cars by 2030. Under the current system of fuel duty and vehicle excise duty, that policy will reduce tax revenues obtained from motoring to zero over the next 20 years. Without radical reform, policies to deliver net zero emissions by 2050 will result in zero revenue for the Government from motoring taxation. A failure to replace existing motoring taxes with an alternative road charging mechanism will lead to either decreased investment in public services, including road maintenance, or increased Government borrowing.
- The Government must start an honest conversation with the public on the funding implications for road development and maintenance and for other essential public services of decreased revenue from vehicle excise duty and fuel duty.
- To promote fairness and public acceptance, any alternative road charging mechanism must (a) entirely replace fuel duty and vehicle excise duty rather than being added alongside those taxes; and (b) be revenue neutral with most motorists paying the same or less than they do currently.
- In signalling a shift to any alternative road charging mechanism, the Government must make it clear to motorists who purchase electric vehicles that they will be required to pay for road usage, as is currently the case for petrol and diesel vehicles. It must ensure that any alternative road charging mechanism incentivises motorists to purchase vehicles with cleaner emissions while contributing tax revenues to support the maintenance of the road network.
- In designing a replacement for fuel duty and vehicle excise duty, the Government must examine how an alternative road pricing mechanism can use price as a lever for change while subjecting motorists to fair levels of taxation.
- In designing an alternative road pricing mechanism to vehicle excise duty and fuel duty, the Government must ensure that any road pricing scheme does not undermine progress towards its targets on active travel and public transport modal shift.
- The Government must set out a range of options to replace fuel duty and vehicle excise duty. The Government’s preferred options should be submitted to an arm’s length body for evaluation.
- The taxes imposed by fuel duty and vehicle excise duty are increasingly duplicated by local schemes that charge motorists for entering congestion zones and clean air zones. New taxes, and particularly those that rely on new technology, take many years to introduce. The patchwork of devolved schemes may make it impossible to deliver a national road pricing scheme. The simultaneous operation of local and national road pricing schemes would subject drivers to confusion and unfair double taxation.
- The Government must examine how an alternative road pricing mechanism can be delivered alongside devolved local road charging schemes, while respecting the existing devolution settlement. Any alternative road pricing mechanism must be revenue neutral to the Government rather than causing drivers, as a whole, to pay more than they do currently.
- The Government must examine the role that telematic technology can play in delivering a replacement road pricing mechanism that sets the cost of motoring based on the duration and time of the journey and vehicle type and size.
- The Government must assess the potential effect of a road pricing mechanism based on telematic technology on high-mileage drivers, such as road hauliers and those in rural communities, and on those least able to adapt to increased motoring costs.
- To fulfil their respective and connected responsibilities for managing congestion and maintaining the public finances, the DfT and the Treasury must jointly establish an arm’s-length body with an appointed individual to evaluate its preferred options to replace fuel duty and vehicle excise duty. The body should consult experts on road planning, taxation and telematic technology, and it should consider international experience. It should be tasked with recommending an alternative road charging mechanism to replace fuel duty and vehicle excise duty by the end of 2022.