The UK government is reported to be considering road pricing to make up for an estimated £40bn tax shortfall, resulting from the proposed 2030 ban on the sale of new petrol and diesel vehicles.
Announced on Wednesday 18th November, the fast-tracking of the ban on sales of fossil-fuelled vehicles has led to government considering a number of options for significant changes to the tax system, with taxes on motoring currently raising around £40bn per year. Without significant changes to the tax system, the speeded up transition could leave a huge hole in public finances.
The idea to introduce a national road-pricing scheme that would use either road tolls or a “pay as you drive” concept to replace the lost tax revenue has been mooted.
The Chartered Institute of Logistics and Transport (CILT) has long supported the concept of road pricing as the way to make better use of roads, to reduce carbon emissions and to fund transport improvements.
The Institute takes this stance because road pricing, in principle, clearly demonstrates to road users the exact cost of their journey, compared with the current system that does not take account of congestion.
It is clear that the Treasury is aware that tax revenues from electricity used to power road vehicles will be substantially less than is currently collected by fuel duty and VAT, and therefore needs to replace this in order to ensure that funding is available for future transport schemes.
Implementing road pricing must be a gradual process. The charges are set to yield a revenue target, with elements introduced in stages to test the public’s reaction and to avoid unintended consequences. Over time, the system can replace fuel duty, road tax and other motoring costs, such as the London congestion charge.
CILT believes that road pricing should achieve public acceptability. By putting driving decisions into the hands of motorists and hauliers, will enable drivers to to directly relate their costs to congestion, while also relying on different routes at different times of day.
Road pricing will also consider various environmental factors – in particular, carbon emissions – not only by avoiding congestion, but by designing the charging structure to encourage fewer polluting vehicles.
In urban areas, the roll-out of electronic charges should be reliant on the introduction of measures to improve alternatives to private car use – including better public transport and safer roads for cyclists and pedestrians, as part of local authorities’ transport and land use strategy.
Properly designed, the road pricing should be classified as a charge not a tax and will have the beneficial effect of reducing total public expenditure levels. The charges should, as far as possible, be paid direct to highway authorities so that local authorities have the responsibility and the resources to implement locally agreed strategies. This is an important element in devolving more responsibility at local and regional level.
History has shown that achieving and maintaining public and political acceptability is critical. The design and implementation of road pricing should be such as to ensure acceptability by politicians and the public.