The financial burden on drivers
It needs to be reduced
Road users pay over £50bn in taxes per year, made up of fuel and excise duties, VAT on fuel and car sales, and company car tax. This is over seven times the amount typically spent on road construction and maintenance. Considering the importance of road transport to the economy, such a huge imbalance cannot be justified.
The cost of road transport has an impact on the price of virtually all goods and services, either directly or indirectly. It also has a major impact on household budgets. Consequently, high road user charges both raise the price of the products people want to buy and reduce the amount of disposable income with which to buy them — a double whammy. Reducing the burden of taxation on drivers would stimulate economic growth, with a net gain to the Treasury over time.
The main burden of taxation on drivers is from fuel duty and vehicle excise duty (road tax). The latter is a tax on ownership, which does not in itself create any wear and tear on the roads. With national databases enabling the authorities to easily determine whether vehicles that are on the public highway are insured or have a current MoT certificate, there appears to be no continuing bureaucratic need for vehicle excise duty. It should be phased out and drivers should be taxed only on the fuel they use, which is proportional to distance travelled.
As long as vehicle excise duty is levied, differential rates based on carbon dioxide (CO₂) emissions should be scrapped. Demonization of CO₂, a trace atmospheric gas vital to all life on the planet, is based on the flawed hypothesis of man-made global warming. In any event, a vehicle’s CO₂ emissions are closely related to its fuel consumption, so those drivers who choose or need to drive a larger car are already paying extra through fuel duty.
Rising fuel prices, whether due to the price of oil or increases in tax, create uncertainty as well as having a direct negative impact on the economy. Fuel duty and VAT on that duty account for over 69p of the price of a litre of petrol or diesel (2016). Put another way, duty and VAT represent a taxation level that is around 140% of the commercial cost of the fuel. There is plenty of scope, therefore, for the Government to stabilise prices at the pumps by varying the tax-take as oil prices fluctuate. This would make it easier for businesses and individuals to plan for the future and stimulate the economy.
The cost of driving needs to be reduced.