- Zero emission vehicles shouldn’t mean zero tax revenue, says
Transport Committee
The UK faces an under-resourced and congested future unless the
Government acts urgently to reform motoring taxation, say MPs on
the Transport Committee.
A road pricing system, based on miles travelled and vehicle type,
would enable the Government to maintain the existing link between
motoring taxation and road usage. In today’s new report, Road
Pricing, the Committee warns that it has not seen a viable
alternative to a road charging system based on technology which
measures road use.
The ban on the sale of new petrol and diesel vehicles from 2030
will result in a corresponding decline in two significant sources
of Treasury revenue. As sales of electric vehicles
increase, Treasury revenue from motoring taxation will decrease,
because neither fuel duty nor vehicle excise duty are currently
levied on electric vehicles. Without reform, policies to deliver
net zero emissions by 2050 will result in zero revenue for the
Government from motoring taxation. The Committee urges the
Government to act now to replace a potential loss of £35 billion
to the Exchequer.
When replacing the existing motoring taxes, the committee calls
for the Government to ensure that the new charging mechanism:
- entirely replaces fuel duty and vehicle excise duty rather
than being added;
- is revenue neutral with most motorists paying the same or
less than they do currently;
- considers the impact on vulnerable groups and those in the
most rural areas;
- does not undermine progress towards targets on increased
active travel and public transport modal shift; and
- ensures that any data capture is subject to rigorous
governance and oversight and protects privacy.
In signalling a shift to an alternative road charging mechanism,
the report calls for drivers of electric vehicles to pay to
maintain and use the roads which they drive on, as is currently
the case for petrol and diesel drivers. There must, however,
remain incentives for motorists to purchase vehicles with cleaner
emissions.
As Departments responsible for managing congestion and
maintaining the public purse, the Treasury and Department for
Transport should join forces to set up an arm’s length body to
examine solutions and recommend a new road charging mechanism by
the end of 2022.
Chair of the Transport Committee, , said:
“It’s time for an honest conversation on motoring taxes. The
Government’s plans to reach net zero by 2050 are ambitious. Zero
emission vehicles are part of that plan. However, the resulting
loss of two major sources of motor taxation will leave a £35
billion black hole in finances unless the Government acts now -
that’s four per cent of the entire tax-take. Only £7 billion of
this goes back to the roads; schools and hospitals could be
impacted if motorists don’t continue to pay.
“We need to talk about road pricing. Innovative technology could
deliver a national road-pricing scheme which prices up a journey
based on the amount of road, and type of vehicle, used. Just like
our current motoring taxes but, by using price as a lever, we can
offer better prices at less congested times and have technology
compare these directly to public transport alternatives. By
offering choice, we can deliver for the driver and for the
environment. Road pricing should not cost motorists more,
overall, or undermine progress on active travel.
“Work should begin without delay. The situation is urgent. New
taxes, which rely on new technology, take years to introduce. A
national scheme would avoid a confusing and potentially unfair
and contradictory patchwork of local schemes but would be
impossible to deliver if this patchwork becomes too
vast. The countdown to net zero has begun. Net zero
emissions should not mean zero tax revenue.”
