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UK road levies 'could be on the way' as fuel duty vanishes

2-minute read

Josh Hall

7 November 2018

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Ministers are reportedly considering charging drivers a levy to use specific roads.

A report in Autocar claims that a Treasury official told a senior fellow at the Policy Exchange think tank that the government was looking at introducing road pricing to raise revenue.

The report comes as ministers consider how to make up the forecast slump in fuel duty revenues as the UK moves towards electric vehicles.

Billions in lost revenue

Policy Exchange believes that Treasury income from fuel duty could fall by as much as £170 billion by 2030 unless electric vehicles attract a duty or new revenue-raising alternatives are introduced.

According to the Autocar report, the government is looking at two measures to make up the shortfall.

One involves “investigating the potential impact of compositional changes in the vehicle stock and its implications for trends in fuel efficiency.” The other, meanwhile, is understood to be charging motorists to use busy roads.

Fuel duty is the biggest tax for drivers

For most drivers fuel duty constitutes the largest tax related to motoring, making up around 44 per cent of the total cost of fuel at the pump.

But pressure to reduce emissions have meant that the government is taking serious measures to reduce UK motorists’ reliance on conventional cars and vans, including a forthcoming ban on diesel vehicles.

According to analysts LMC, by 2025 one in ten cars sold across Europe will be pure electric, with the number expected to rise rapidly from that point.

Commentators believe that fuel duty will then vanish completely, causing major headaches for the Treasury.

AA president Edmund King told Autocar: “It’s almost as if no one is addressing the issue. We know that duty is going to disappear, but no one is facing up to it.”

Do you think the government should introduce road pricing to make up the predicted shortfall in fuel duty revenue? Let us know your thoughts in the comments below.

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