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Road pricing needn't hurt

Date: 06 December 2006

With 'blunt' eco taxes potentially replaced by 'sharp' ones the genuinely low carbon fleet may have less to fear than it thinks, says Guy Bird

Every time a politician moots a new environmental tax idea relating to cars, the bleeding heart motorist PR lobby usually resorts to one of two knee-jerks retorts.

The first can be paraphrased thus: "The Royal Automotive Foundation for Rural Speeding (RAFRS) gives a cautious welcome to the new taxes as we all want to save the planet. But you'll never get us out of our comfy air-conditioned motors and onto crowded and smelly buses unless all the proceeds are poured back into public transport and our local hopper bus resembles a stretch limo." Or there's the more basic: "Don't we pay enough motoring tax already?"

Unfortunately, neither response washes any more with any political party. According to recent Department of Transport figures, the cost of motoring dropped 11% in real terms between 1975 to 2004 while bus and train fares rose by up to 70%. "Time to cough up" is the consensus, once you peel away the different hues of political rhetoric.

But of the ever increasing number of schemes dreamt up by politicians to tax motorists, maybe carefully targeted road pricing - one of the major ideas in the draft Road Transport Bill listed in the recent Queen's speech - might give genuinely low carbon fleets the chance to save a few quid.

Let me recap.

Time was when you got taxed on the fuel you used, paid a flat-rate VED fee and company car tax related to the car's engine size plus business annual mileage. The more you did the cheaper it got - how's that for an incentive to fake or do needless business mileage?

In the past five years that's been changed to reflect - in the case of company car tax and later VED - the grammes per kilometre tailpipe CO2 effect of your vehicle's emissions as well. The CO2-related benefit-in-kind company car mechanism has persuaded thousands of business drivers to ditch less fuel-efficient cars and go for lower emitting ones, but its environmental stance still doesn't fully square up to usage. In the future, these blunt CO2-related taxes could change to reflect total 'well-to-wheel' emissions - from manufacture to use and disposal.

“I can picture it now: five up in a Toyota Prius with a 50-something female at the wheel, driving to a recently relocated rural office, reached by quiet under-used roads, well before 7am driving at a steady 56mph in top gear avoiding sudden braking.”

Guy Bird

In 2003, we got our first proper taste of de facto road pricing in the UK with the mother of all blunt taxes - the London Congestion Charge. The only vehicles that don't have to pay include a handful of hybrid, electric or clean gas models and minibuses. Up to now, no fiscal differentiation has been made between the cars that currently do have to pay (although that could change in about 2009 if Ken gets his way).

More specific 'paying for when you drive' insurance is already enshrined in certain Norwich Union tariffs for young motorists who get charged more to be insured per night time driving mile, as statistically this is when more young people are involved in accidents. And there's also a 'pay how you drive' insurance scheme that promises firms rebates of up to 15% if their drivers' behaviour improves after being monitored on the harshness of their braking, acceleration and more.

Five-up in a Prius

The DfT's road pricing system could theoretically be accurate enough to charge future drivers on all these criteria. What vehicles they drive and where (including the detail of whether you are driving against the traffic flow or causing the congestion on the same road), when and with whom (multiple occupancy vehicles will obviously gain extra brownie points) and of course 'how'. Gun the engine from the lights and you pay more insurance and tax.

I can picture it now: five-up in a Toyota Prius with a 50-something female at the wheel, driving to a recently relocated rural office, reached by quiet under-used roads, well before 7am driving at a steady 56mph in top gear avoiding sudden braking and only using the aircon when the windows steam up and become a visual safety hazard. Who said green fleet taxes had to be a burden?

Flippancy aside, fleets will have to start considering very seriously their transport policies from all these eco angles and at the least find a middle ground between the above scenario and a single occupancy driver of a V8 petrol-engined beast stuck in rush hour traffic for no good reason. The forward-looking fleets are genuinely changing already, saving money and gaining business-competitive advantage in the process. Hell, they might even be feeling good about doing their bit for the environment too.

Guy Bird is our editor-at-large and political columnist



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