IFS puts its money on road pricing

 

A system of road pricing varying by time and location would be ‘the ideal approach’ in the face of falling revenue from existing sources, public finance experts have said.

In a new report, the Institute for Fiscal Studies (IFS) warned that with revenue from fuel duties down by £19bn – nearly 1% of national income – since 2000 a further £28bn could still to be lost ‘if we don’t act soon’.

It warned that a possible 2p per litre cut in fuel duty, which prime minister Boris Johnson is said to be pressing for in the upcoming Budget, would cost £1bn a year in lost revenue on top of the £5.5bn lost since 2010–11 from the failure to increase rates in line with CPI inflation.

”Local
The shift to electric vehicles will see a fall in fuel duty

Revenue from fuel duties is now £28bn a year – 1.3% of national income having peaked at 2.2% of national income in 1999/2000. Had it remained at that level, the exchequer would currently be getting an extra £19bn, the IFS said.

But it warned that the Government’s commitment to reaching zero net emissions by 2050 means that revenue from fuel duties will completely disappear over the next few decades, presenting ‘a huge long-run fiscal challenge’ and a further economic and social challenge.

It said taxes on motoring help to correct for the social costs of driving which include greenhouse gas emissions, local air pollution, noise, crashes, damage to infrastructure and congestion, which is by far the biggest cost and will remain after the transition to electric cars.

Rebekah Stroud, co-author of the report and a research economist at the IFS, said: ‘The Government should set out its long-term plan for taxing driving, before it finds itself with virtually no revenues from driving and no way to correct for the costs – most importantly congestion – that driving imposes on others.’

The IFS said new taxes should be designed that can gradually replace fuel duties.

‘These should reflect at least distance driven, and ideally vary according to when and where journeys take place. Those driving in busy places would pay more, but the majority of journeys would be taxed less heavily than at present.’

It said there is an advantage in acting quickly as it will be much harder politically to introduce such taxes only after revenue from fuel duties has fallen much further and many people are driving hybrid or electric cars in the expectation of paying little tax on them.

The findings come from a chapter entitled ‘A road map for motoring taxation’ in the IFS Green Budget. Key findings include:

  • To effectively correct for the social costs of motoring we need to look beyond existing taxes. The ideal approach would be a system of road pricing with charges varying by time and location. Failing that there is a case for introducing a flat rate tax per mile driven;
  • Fuel duties take about the same fraction of the budget of low, middle and high-income households on average. However, looking only at households with a car, fuel duties take more of the budget of low-income drivers;
  • Fuel taxes account for more than 10% of the (non-housing) spending of about one household in 20, producing ‘a heavy burden for those who have little choice over how much they drive’;
  • The only justification for retaining the annual vehicle excise duty (VED) on car ownership is if the Government rules out using fuel duties to raise revenue in its place. Similarly, company car tax should not be linked to emissions if the Government can set fuel taxes and the VED ‘showroom tax’ appropriately.
 

Also see

Register now for full access


Register just once to get unrestricted, real-time coverage of the issues and challenges facing UK transport and highways engineers.

Full website content includes the latest news, exclusive commentary from leading industry figures and detailed topical analysis of the highways, transportation, environment and place-shaping sectors. Use the link below to register your details for full, free access.

Already a registered? Login

 
comments powered by Disqus
 
 
highways jobs

Head of Highways, Transport and Recycling

Powys County Council
£77,282 – £84,102 per annum 
We are seeking to recruit a highly motivated and inspirational leader as our new Head of Highways, Transport and Recycling here in Powys. Powys
Recuriter: Powys County Council

Waste Loaders

City of York Council
£9.52 per hour
Do you have a current UK driving licence? York, North Yorkshire
Recuriter: City of York Council

General Operatives/Drivers/Gardeners

City of York Council
£9.52 to £10.30 dependent upon experience
Do you have a current UK driving licence? York, North Yorkshire
Recuriter: City of York Council

Programme Manager - Highways

Kirklees Metropolitan Council
£42,683 - £44,632
Are you an experienced, talented and collaborative Programme Manager with experience of supporting public sector transformation and change? Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council

(Senior) Environmental Health Officer/Enforcement Officer

Brent Council
£35,724 - £41,706 p.a. inc.
We are looking for Environmental Health Officers; EHRB registered and has current experience in food safety and health & safety enforcement. Brent, London (Greater)
Recuriter: Brent Council

Road worker/Ground worker

City of York Council
£10.30 per hour
Have you successfully worked as part of a team? York, North Yorkshire
Recuriter: City of York Council

HGV Relief Driver

North West Leicestershire District Council
Salary Band D, £21,589- £24,799 per year (pro rata to period of contract)
We are looking to recruit temporary HGV Relief Drivers with occasional loading duties to join NWLDC’s busy Waste Services Team. Coalville, Leicestershire
Recuriter: North West Leicestershire District Council

Waste Services Worker (Loader)

North West Leicestershire District Council
Band B, £18,795 - £19,171 per year (pro rata to the length of contract)
We are looking for Waste Operations Loaders to join our Waste Services Team to undertake waste collection and other related duties. Coalville, Leicestershire
Recuriter: North West Leicestershire District Council

Chargehand/Ganger

City of York Council
£11.09 per hour
Do you have experience of excavation, reinstatement and footway maintenance schemes? York, North Yorkshire
Recuriter: City of York Council

Sustainability & Resilience Manager (maternity cover)

Essex County Council
£51510.0 - £58752 per annum
This fixed-term contract will begin in August 2020 and is expected to last until October 2021 Interviews scheduled to be held Wednesday 10th June 2020 England, Essex, Chelmsford
Recuriter: Essex County Council

Civil Service Deputy Director Roles

GOV.UK
£70,000 - £117,800 & excellent rewards
We’re looking for significant experience of engaging at C-Suite and Board levels, excellent partnership-building and... England
Recuriter: GOV.UK

Engineer (Highways Scheme Design)

Medway Council
£31,888 - £37,646 per annum
The post-holder will be required to have highway engineering expertise in order to contribute to efficient and effective provision of... Medway City Estate, Rochester
Recuriter: Medway Council

Principal Flood Risk Officer

Lancashire County Council
£42,683-£46,566
We have an exciting opportunity for a Principal Floor Risk Officer Lancashire
Recuriter: Lancashire County Council

Resources and Waste Commercial and Contracts Manager

Northumberland County Council
£47,107 - £50,394
We are looking for a strategic, innovative and performance-focused leader to join us as Resources and Waste; Commercial and Contracts Manager. County Hall, Morpeth, Northumberland
Recuriter: Northumberland County Council

Principal Planning Liaison Officer X3

Somerset County Council
£33,799 to £37,849 per annum
We have a number of fantastic opportunities in Somerset at various levels Taunton, Somerset
Recuriter: Somerset County Council

Principal Estate Roads Engineer

Somerset County Council
£33,799 to £37,849 per annum
We have a number of fantastic opportunities in Somerset at various levels Taunton, Somerset
Recuriter: Somerset County Council

Principal Travel Plan Officer

Somerset County Council
£33,799 to £37,849 per annum
We have a number of fantastic opportunities in Somerset at various levels Taunton, Somerset
Recuriter: Somerset County Council

Assistant Estate Roads Engineer x2

Somerset County Council
£25,295 to £28,785 per annum
We have 2 exciting opportunities for enthusiastic and committed individuals to join our Highways Development Management Team Taunton, Somerset
Recuriter: Somerset County Council

Design Services Manager

Lincolnshire County Council
£50,430 - £55,503
We are a team of mixed experience and skills, proud to serve the people of Lincolnshire and have fun whilst doing so! Lincolnshire
Recuriter: Lincolnshire County Council

Transport Planning Officer

North Yorkshire County Council
£29,636 to £32,029
We are looking for a Transport Planning Officer to join our Highways and Transportation service. Northallerton, North Yorkshire
Recuriter: North Yorkshire County Council