Cheaper Vehicle Excise Duty for non-motorway users considered

 
A general view of traffic on a motorway Reforms to road tax follow concerns that increased fuel efficiency could lead to a fall in revenue

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A two-tier Vehicle Excise Duty, with a lower rate for those avoiding motorways and other main routes, is among options being considered by the government.

The plans would not necessarily mean those using motorways pay more than at present, a Treasury source said.

The government is currently looking at a number of different ways that roads could be owned and paid for.

The plan has yet to be considered by the prime minister, who had called for "innovative approaches" on the issue.

In March, David Cameron launched the review by saying there was a need for an "urgent" increase in private investment to improve England's road network.

Fresh ideas were needed, he said, to finance road improvements at a time of tight government finances and set the Treasury and Department for Transport to work on a feasibility study.

Under the two-tier plan, part of a driver's Vehicle Excise Duty payments would go to private companies managing and investing in the road network.

Falling revenue

Cameras using number plate recognition technology would be used to catch motorway users who had not paid the higher rate.

Reforms to the duty - often referred to as road tax - follow concerns that increased fuel efficiency could lead to a fall in revenue from it as motorists switch to more environmentally-friendly cars which qualify for lower rates.

Forecasts from the Office for Budget Responsibility show that while tax receipts for Vehicle Excise Duty are expected to remain broadly flat at about £6bn a year over the next five years, they could fall as a percentage of GDP from 0.4% in 2010-11 to 0.1% by 2029-30.

Under the current system, cars fall into 13 payment bands depending on their level of carbon emissions, with more polluting vehicles taxed more heavily.

The duty is paid annually, but a higher rate is payable in the first 12 months of the vehicle's registration.

Cars with the lowest levels of carbon emissions, such as hybrid cars registered in or after March 2001, are exempt from paying the duty.

European regulations aimed at reducing carbon emissions from new cars and improvements in technology are expected to lead to a higher proportion of cars qualifying for the lower bands of VED in the future.

The Daily Mail reported that other options being considered by the government include changes to the duty's payment bands or making the tax a one-off up-front charge on new vehicles, instead of charging annually.

However, linking how much motorists pay with how far they drive on motorways, or their use at peak times, has been ruled out, the newspaper said.

A spokesman for the Department for Transport said: "The department and Treasury are currently carrying out a feasibility study to review new ownership and financing models for the strategic road network.

"This is looking at how best we can secure investment in the network to increase capacity and boost economic growth.

"The government has made clear it will not implement tolls on existing road capacity and has no plans to replace existing motoring taxes with pay-as-you-go road charging."

 

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  • rate this
    -2

    Comment number 749.

    What about old cars.
    Why should old cars be exempt from road tax, its ridiculous to exempt the most dangerous & poluting cars from road tax

    If some want to mess around on roads 2 or 3 times a year in an old crate (many use all year long) it is outrageous that other road users/taxpayers via government collaboration subsidise this luxury.

  • rate this
    +1

    Comment number 748.

    715.Semisatanic

    "why do we need another load of hairbrain ideas for taxing us when the most intelligent and logical is to abolish road tax and add it to fuel duty!"

    Ah; now there's where your argument falls to the ground. You see it?

    "hairbrain ideas" = government policy in the making

    "intelligent and logical" = incompatible with my lust for power.

  • rate this
    +1

    Comment number 747.

    'The plans would not necessarily mean those using motorways pay more than at present...'

    If you believe that, then you'll believe just about anything these clowns tell you.

    Fact is lots of us have been been buying more fuel efficient cars and driving less = less revenue = they have to make up the difference somehow, but there must be fairer ways than this.

  • rate this
    -3

    Comment number 746.

    The sensible thing to do, to prevent poor people from being stung dispropotionately, is to abolish VED, raise duty on fuel to compensate, and charge an annual fixed fee for use of motorways and other main roads.

    The cost of the roads far exceeds VED and fuel duty, so it's only fair that commuters earning more by exploiting geographical pay rate differentials pay a little more. Perhaps £250 pa?

  • rate this
    +14

    Comment number 745.

    Historically there was an argument for the Road tax in that it 'forced' car owners to get insurance and MOT's - now that both insurance and MOT's are directly available to the law enforcement bodies, why bother with the costs of having such a tax.
    There is already enough taxation based on vehicle useage to pay for it's complete abolition.

  • rate this
    -1

    Comment number 744.

    Had an excellent drive home the other day on the plebe queue jumping M6 toll. Sad thing is I was on business normally being a plebe there is no way I could afford to pay the £5.50 each toll on a relatively short piece of motorway don't forget most business mileage is commuting which the government refuses to acknowledge as business mileage and is done at plebe expense with no tax relief

  • rate this
    -3

    Comment number 743.

    What has always been a complete nonsense is to fund the railway tracks and trunk roads on a quite different basis - which has led to the absurd situation that it has always been cheaper to drive my private car than take the public train - which gets worse for a whole family. So a surcharge on the use of motorways could make sense if the money raised helps to make taking the train cheaper.

  • rate this
    -3

    Comment number 742.

    Having driven down through France many times, their toll system for motorways provides a much better driving experience.

    All of our motorways should be converted into toll roads.

  • rate this
    +1

    Comment number 741.

    The PFI Expressway
    Just another rip off uk privateers charter for 20% yvy tax increases by a cartel of money grabbing bonus munchers.

  • rate this
    -1

    Comment number 740.

    In before all A and B roads are clogged up with traffic and no-one uses the rather expensive motorways.

  • rate this
    0

    Comment number 739.

    This is a sure sign that this grasping government is about to introduce tolls.

    Better idea - we already pay car tax, road fund licence, petrol tax etc etc through the nose. We then pay tolls on continental roads e.g. French/Spanish, whilst they pay nothing in the UK.

    So let's levy a £1,000 charge per annum on all foreign lorries entering Britain and £250 pa for foreign cars.

  • rate this
    0

    Comment number 738.

    In answer to 563.Daiham

    Camera infrastructure already in place!!!!!

    How did police know I was on such and such road at a particular time.

  • rate this
    0

    Comment number 737.

    Why does the UK Government not follow continental practice and apply MOT and Road Tax on caravans and trailers?
    I find it incredible that a caravan owner does not need MOT or additional insurance, can hitch up and drive off after 6 months lay up with no checks.
    I believe that it would only be fare to other road users that separate license plates, road tax, MOT and insurance liabilities

  • rate this
    +1

    Comment number 736.

    There is no logic here. Until recently I had a long commute at peak hours to and from work. We barely broke even and regularly dipped into savings. I think this would result in more people being unable to work. Keep the roads for the Tories and their affluent cronies it it?

  • rate this
    0

    Comment number 735.

    Do what Thatcher was going to do, Put it on petrol more you use the more you pay. That way you will get all of the foreign cars and lorries paying to use our roads.

  • rate this
    +2

    Comment number 734.

    If just 20% of regular commuting car/road users used car share schemes then as well as saving themselves 25%/50% commuting costs, it would reduce congestion and reduce/negate need for new roads & also reduce maintenance costs.

    Thing is wastefullness is a HUGE taxation earner for government, hence why so much is endemically mismanaged, because organised wastefulness is so profitable.

  • rate this
    +3

    Comment number 733.

    As always the poor will pay more than the rich, first there was £2000 of a new car and if you were fortunate enough to have the money to buy a new vehicle in the first place and purchased a low emission car you paid no road tax either!, and now because of the resultant drop in road tax they are going to fleece road users and as always the poor driver will suffer the most.

  • rate this
    +2

    Comment number 732.

    ..@656. shakermistyeyed..."Stupid idea...More sensible is to abolish VED and fuel duty and levy tax based on road usage. Every car has a chip which records mileage."
    ...
    There will be plenty around who could by-pass or clone a chip!

  • rate this
    +3

    Comment number 731.

    They're not trying to find a way to make roads better, they're simply trying to find a way to privatise them. It'll end up like British Rail, higher costs for the taxpayer, a worse service & a lot of extra bureaucracy + the government constantly having to interfere to sort out problems & so will create bigger government

  • rate this
    +2

    Comment number 730.

    Black Pearl

    I agree, I have a 4X4 which averages over 50mpg, hardly a gas guzzler.

    Get foreign lorries to pay their way!

    And domestic lorries off the road at peak times

    Actually clamp down on car without tax/mot/insurance, proper fine and confiscate the car.

 

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