Think-tank calls for big changes to motoring taxation

Current rules unfair to poorer drivers, says IPPR

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LONDON, UK - JULY 20: Heavy traffic on british motorway M1 on July 20, 2012, London, UK. The M1 is a north-south motorway in Eng

Left-leaning think-tank, the Institute for Public Policy Research (IPPR), has suggested changes to the motoring tax system that could see well-off drivers charged more.

In a series of proposals that it admits would "require a great deal of political courage", it calls for changes to fuel duty and road tax designed to reduce pollution and congestion.



These include bringing in seasonal pricing to encourage people to walk or cycle more in summer, charging comparatively more for shorter journeys, and charging gas-guzzling vehicles more than less-polluting vehicles. It also advocates the introduction of more road tolls, higher prices for HGVs and more congestion charges. The charges could be means-tested, it says.

"Theoretically, a replacement motoring tax in the UK could be progressive by linking information on vehicle ownership held by the DVLA to information on income held by HMRC," reads the report.
"It would thereby be possible to create a system that targets individual unnecessary journeys but which makes allowances for people's incomes."

The recommendations follow a poll that revealed a strong sense of unfairness over the current taxation system.

"If I fill the tank it's £75, and you are filling that every week. It's a lot of money, £75 a week on fuel, and that's without the other costs," complained one respondent. Another added, "It seems like I'm going to work to pay for the commute".

A particular source of complaint was the fact that road tax is currently paid regardless of how much a car is actually driven. "I think if you have a system of paying per miles, [that] would be a fairer way than punishing people who have to get into the city centre," said one.

The report was written by Mark Rowney, an IPPR fellow and Labour candidate for Battersea in its forthcoming local election.

"Motoring has become more expensive. Fuel prices rose by 23 per cent above inflation between 2007 and 2012. At the end of 2012, fuel duty made up 61 per cent of the cost of petrol and 59 per cent of diesel's cost," he writes.

"This form of taxation is regressive, since it hurts poor car owners more than the rich. Because many are cannot afford to run a car at all, households in the poorest quintile take, on average, more taxi trips per year than other households. Motor taxation in the future must be more progressive."

The changes proposed by the IPPR are highly unlikely to all come into force - and certainly not all at once. The public is staunchly opposed to national congestion charges, with 1.8 million people - eight percent of the total driving population - signing a petition in 2007 protesting against such a policy.

"Of the UK population and AA members, about 70 percent don't want road charging in any shape or form - so attempting to introduce it by the back door will receive a massive vote down," says an AA spokesman.

He also criticised the idea of graduated costs for better-off drivers. "If you use your wealth to invest in a new technology vehicle, that's more efficient than driving a five-to-seven-year-old car," he said. "That wealthy person is making a better contribution to reducing emissions."