IFS
advice on moving from fuel duty to taxing road use
This
proposal from the IFS raises so many issues, some clearly public policy concerns
with proposals intended to ease congestion and raise charges for driving in congested
or busy areas. But it also raises practical implementation issues like how road
use charges would be determined and collected with the prospect of varying levels
of charges for particular roads and at different times in the day.
For
limited mileage classic car enthusiasts the impact might be small unless a higher
road use charge is applied for vehicles not meeting the low emissions levels achieved
by modern cars.
Posted:
150607
|  | In
a paper released by the Institute for Fiscal Studies on 8th May 2015 before the
result of the UK General Election was known, Paul Johnson set out "five pieces
of general advice on what is needed for tax policy for whoever is the new government"
together with "more specific pieces of advice aimed at particular parts
of the tax system". The sixth piece of specific advice included the following
recommendation on moving from taxing motor fuel to taxing road use: | 6.
Set out a plan to move us from taxing road fuel to road use
Fuel
duties raise over £25 billion a year. But it seems to have become politically
very difficult to raise their level even in line with inflation, so real revenues
are falling. If we are to get anywhere close to meeting legislated targets for
greenhouse gas emissions, we will have to move away from reliance on petrol and
diesel, so revenues will eventually fall drastically. And from an economic point
of view fuel duties are very poor at targeting congestion, the main problem caused
by road use. In the end we are likely to be forced into moving towards some form
of road-user charging. Recognise that and prepare for it.
The paper
ends with an amusing self congratulatory comment - "So there you have it
Chancellor. I wouldn’t expect you to do all of that in one term. But if you
were to make a start on just some of it you would be a hero to public finance
economists for decades to come. What
other reward could any Chancellor desire!"
See
the IFS paper. More |
|
