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UK Treasury Once Again Looks Towards Taxing Vehicle Road Usage

The UK Treasury is once again looking towards taxing road use by each vehicle as one solution to recovering the billions of pounds currently raised by fuel-duty revenue, this money will almost certainly be lost after the 2030 ban of diesel and petrol vehicles come into force.

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Many recent reports have even suggested that not just the sales of new petrol and diesel vehicles will be banned in the UK by 2030, but also the new plug-in hybrids (PHEVS) from 2035, another possible major blow to the motor trade industry.

The Times newspaper reported that a Treasury paper on this matter has already been presented to Rishi Sunak, the UK Chancellor, reporting that while such a scheme is not “imminent”, Mr Sunak is “very interested” in the concept itself.

As an option, the Chancellor and Treasury are considering introducing a nationwide fuel pricing scheme to help raise the lost revenue from vehicle fuel duty.

On top of a motor insurance policy and the everyday vehicle running expenses, Britain’s motorists currently pay around 58p in fuel duty for each litre they purchase, this amounts to around 28 billion pounds a year!

In 2019 the Institute for Fiscal Studies warned the government’s commitment to reaching net zero emissions by 2050, a legally binding target, means “revenue from fuel duties will completely disappear over the next few decades” and also presented a “huge, long-run fiscal challenge for the government”.

Under a previous Tony Blair government, Labour backed and abandoned plans for a national road pricing scheme, with a petition against the proposed plans reaching 1.8 million signatures, with many in the motor trade industry also against the concept.

Back in November 2018, Auto Express submitted a freedom of information request to the Treasury asking if it was considering a nationwide road pricing scheme to raise the funds lost by fuel duty revenue, the Government admitted: “HM Treasury does hold information within the scope of your request” but refused to provide details as the Freedom of Information Act allowed such withholding of information if it related to the “formulation of government policy”.

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As for how nationwide road pricing would work, no specifics have yet to emerge, but it is considered that a pay-per-mile system would come into place, one potentially linked to each vehicle GPS, or the extensive ANPR system already used on the UK road networks would be brought into play. Increased charges for more polluting cars could also be introduced, like ULEZ.

President of the AA, Edmund King said: “It is always assumed that Road Pricing would be the solution but that has been raised every five years since 1964 and is still perceived by most as a poll tax on wheels.”

King followed on to say, “We need a more imaginative solution and have proposed ‘Road Miles’ whereby every driver gets 3000 free miles, with one third more for those in rural areas, and then a small charge thereafter.”

Even though these new imposed rules may help to reduce carbon dioxide emissions, they will certainly not aid the government finances as they slowly dry up as we edge closer towards 2035.