It’s time to ask taxing questions
Road pricing is rising up the fiscal and transport policy agendas
The UK government’s ambition of ending the sale of new petrol and diesel vehicles is a positive policy in terms of tackling the twin evils of poor air quality and climate change. To help encourage the transition to zero emission motoring, drivers of electric vehicles have been given incentives such as exemptions from vehicle excise duty (VED). However, this approach cannot continue. Policies to deliver net zero
emissions by 2050 are likely to result in zero revenue for the government from motoring taxation by 2040. The two principal motoring taxes,fuel duty and VED, generate significant revenues for HM Treasury. Taken together, these taxes raise some £35bn a year, which comprises approximately 1.5% of UK GDP. It is clear that if the government does not reform motoring taxation before electric vehicles become the norm on UK roads, the country faces a massive black hole in its finances.
