It will be difficult for the government to resist the new proposal for a two-tier road tax system
This weekend’s reports about a new two-tier VED system – where you would have to buy a more expensive tax disc to drive on the motorway network – should come as no surprise. Plans to toll the UK motorways go back to the mid-1990s when intensive work on the idea of tolling the busiest motorways in the busiest commuter zones started.
The reality is that it doesn’t matter what shade of Government we elect, the Treasury will continue to pursue ways of extracting enough tax from us to keep the great State machine rolling. As Jean-Baptiste Colbert (treasurer to the Court of Louis XIV in the 17th century) is supposed to have said, the art of successful taxation is like plucking geese and obtaining the maximum number of feathers with the minimum amount of hissing.
Of course the policy wonks in the Treasury are not as clever as they should be. Tasked with keeping the tax rolling in, they completely bought the idea of incentivising motorists to buy more fuel-efficient cars, piling the taxes on so-called gas guzzlers.
But the combination of ever-higher fuel taxes, the recession and much more frugal cars means the Treasury is seriously out of pocket. Between April and June this year, around 500m fewer litres of petrol were sold in the UK, compared to a year earlier. Edmund King of the RAC says that 2.27 billion fewer litres of fuel were sold in the first half of 2012, compared with the first six months of 2008.
By now, the Treasury was hoping that road tolling would have taken hold. The cack-handed London Congestion Charge put paid to that idea, making just 25p profit from the original £5 daily fee and handing out millions in fines because drivers couldn’t set up pre-pay accounts. Votes on introducing a C-Charge in Edinburgh and an even bigger scheme across Greater Manchester were lost heavily. Indeed, the M6 Toll remains underused and the profits barely pay the interest on the loan used by the private operator to buy it.
Private toll roads in Australia are going into receivership as hard-pressed drivers vote with their tyres and refuse to pay. Further into the future, fewer young people have driving licences and the miles driven for the purposes of ‘socialising’ are dropping dramatically. This, and the rise of a real-world 65mpg for many new cars, means the Treasury’s automotive goose is, if not cooked, increasingly bald.
Which is why this weekend’s wheeze – not endorsed by the Coalition as yet – of a separate, more expensive, tax disc for motorway access, is so clever. Most motorway driving is business miles and business drivers do not have time to schlep cross-country, so they are a captive audience.
Our natural urge to avoid a one-off toll fee is, instead, submerged in a yearly charge. Even better, the rural areas hit hard by rising fuel taxes don’t have motorways, so locals won’t need the more expensive tax disc. If, say, half the 31 million vehicles on UK roads, paid an extra £150 per year would raise an extra £4.5bn per year, allowing non-motorway tax discs to be reduced in price by £50 per year and the Treasury would still be £3bn ahead. And the technical infrastructure needed would be limited to ANPR cameras on the slip roads.
With the Treasury’s haul of motoring taxes looking seriously at risk, and half the motoring population hissing a little less, I can’t see how the Whitehall mandarins will fail to get Ministers to rubber stamp this plan.