File photo dated 23/8/2019 of traffic along the M3 motorway near to Winchester in Hampshire.

Majority want UK vehicle taxation reforms

Image credit: PA Wire/PA Images Picture by: Andrew Matthews

Nearly half (49 per cent) of people support replacing fuel duty and vehicle excise duty (VED) with a pay-as-you-drive scheme, according to a new report from Campaign for Better Transport (CBT).

VED is a tax levied on every vehicle on UK roads. The first-year rate for new vehicles varies according to their carbon emissions, from zero for the cleanest models to as much as £2,000 for the most polluting. A flat rate of £140 applies for subsequent years, except for zero-emission vehicles which continue to have no charge.

The survey of 3,000 UK adults’ views on road pricing found that three out of five people (60 per cent) believe vehicle taxation needs reforming. Nearly half (49 per cent) favour a scheme that charges drivers based on how they use their vehicles.

The research carried out for pressure group the Campaign for Better Transport (CBT) found that people supported a well-designed pay-as-you-drive system that they believe would be a fairer and more transparent way to tax electric vehicle (EV) drivers and could ensure people who drive less, pay less.

Those polled thought that a scheme which included measures such as a tax-free mileage allowance would enable tax cuts to target specific groups, like those who have to drive for work, and would mean people who live in places where there are no public transport alternatives wouldn’t be unfairly penalised, either through a higher tax-free allowance or being charged a lower rate.

A pay-as-you-drive scheme would have the added benefit of bringing an immediate tax cut to drivers with the removal of VAT on fuel duty.

The government is facing increasing pressure to look seriously at a way of taxing motorists who drive EVs, with the 2030 ban on the sale of new petrol and diesel vehicles otherwise set to leave the Treasury with a £35bn fiscal black hole.

Speaking in front of MPs in the Commons Liaison Select Committee earlier this year, former prime minister Boris Johnson accepted that it was “certainly the case that we will need a substitute for fuel duty”.

Paul Tuohy, CBT chief executive, said: “The need to reform vehicle taxation is becoming increasingly clear as we rightly move away from petrol and diesel vehicles in order to tackle climate change.

“What this research shows is that road pricing, far from being an unacceptable concept to the public, is in fact one that the majority of people believe can be implemented fairly and could in fact save most drivers money.”

The report also found that a number of measures would further increase public support for a pay-as-you-drive scheme including a commitment to raise no more than fuel duty and vehicle excise duty currently do and ensuring that tax intake keeps pace with the increased adoption of zero-emission vehicles.

Silviya Barrett, CBT head of research, said: “Our research found that many of the common concerns around road pricing, things like protecting people’s privacy and not penalising people who need to drive, can be overcome with a well-designed pay-as-you-drive scheme. “In fact, support for road pricing increased among the survey group over the course of the research once the scheme was fully explained, proving that public concerns about road pricing can be overcome.”

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