Mike Waters' Blog: 6 June 2012 - Would you pay the price?
06 June 2012
Mike Waters is senior insight & consultancy manager at Arval, the leading vehicle leasing and fleet management company.
If you asked drivers whether they were happy with the amount of vehicle related tax that they currently pay, it's a fair bet that the vast majority would say no.
With fuel prices reaching record highs and mounting pressure on our wallets, it often feels like drivers pay a high price. However, how would you feel about the alternative and is it any better?
In all likelihood, this alternative would be an increase in road charging, a view corroborated by The Institute for Fiscal Studies (IFS).
It says that there is a strong case for making a switch from current motoring taxation to a system of national road pricing which would include toll roads.
The IFS believes that charging motorists for every mile they drive would not only reduce congestion, it would also allow the Government to reduce taxation on fuel.
The system would be flexed to charge more in the most congested areas and at the busiest times as a means of influencing driver behaviour.
So it has the potential to be a fairer system because it is based on road use which means that those who derive the most benefit pay the biggest bill.
Plus it would allow the Government to maintain revenues at a time when more efficient vehicles using less fuel have reduced the amount that they generate through UK fuel use.
According to the IFS this equates to a drop from £38bn a year now to the equivalent of £25bn in 2029-30.
With the government needing to reduce borrowing and bolster its coffers this just doesn't work and could prompt increases in other areas of taxation - most notably income tax and VAT.
However, while this approach looks fairer - it is liklely that some will be better off while others will no doubt do worse.
In particlaur those people who have no choice but to drive, either because they live in an isolated area, they have to get to and from work, or they need to drive for their job.
Therefore this approach is likely to be contentious. So we have to engage in a serious debate on whether it is better than the current position, and with fuel prices only going in one direction, a change of emphasis onto road use is a realistic option.
In terms of which is the lesser of two evils; I will let you decide.
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