Road pricing: Why motorists will almost inevitably have to pay a new tax on driving – Ian Swanson

The voters' verdict was clear. When Edinburgh held a referendum in 2005 on plans to introduce road tolls, the result was three to one against.

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The congestion charge proposal would have seen thousands of motorists paying a £2-a-day to drive into the city, with the money raised going to fund public transport improvements.

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But with a 61.7 per cent turnout, the vote was 45,965 in favour and 133,678 against.

Seventeen years later, the idea of road user charging is back on the agenda again, not just for Edinburgh but for the whole country.

With the sale of new petrol and diesel cars due to be banned from 2030, the current system of motoring taxes – which relies on Vehicle Excise Duty or road tax (tax disc) and fuel duty – will have to be reviewed.

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Electric vehicles (EVs) don't pay these taxes, so if nothing changes revenue will plummet, leaving a huge hole in government finances.

Across the UK, road tax raises about £7 billion a year specifically for road building and maintenance and fuel duty brings in around £28 billion a year which goes into the general government pot. That adds up to about four per cent of all government revenue.

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Cars could be taxed according to where and when they are used. Picture: Lisa Ferguson
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Putting extra taxes on the electricity used to charge EVs would be complicated and while EVs could be made subject to road tax that’s seen as an outdated tax which fails to discriminate between cars driven daily at peak times on congested roads and others which are used less often, at quieter times or on less busy roads. A different approach is needed in these environmentally conscious times.

The Reform Scotland think tank has produced a new paper proposing a pay-as-you-drive system with in-vehicle technology to charge motorists variable amounts depending on which road they are using, which type of vehicle they are driving and what time of day they are travelling. And they are calling on Chancellor Rishi Sunak to use his Spring Statement tomorrow to acknowledge the need to move towards such a scheme.

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The paper argues pay-as-you-drive pricing means drivers are charged fairly for the choices they make, taking into account the impact on the road network and the wider environment. And it says it would encourage people to think about public transport and active travel alternatives.

The principle of moving to road pricing has already been endorsed by the House of Commons transport select committee, which said trying to recoup the lost motor tax revenue through higher general taxation would be unfair to non-drivers.

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But it said road pricing would have to be "revenue neutral" with most motorists paying "the same or less than they do currently".

And it urged the government to start "an honest conversation with the public" on the matter soon, pointing out that if electric vehicle drivers get too accustomed to tax-free motoring it will become politically difficult to start taxing them.

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There will be all sorts of objections to the idea and plenty hurdles to be overcome – not least successfully developing the technology and infrastructure needed to implement the new system.

But unless someone come up with an alternative solution, it feels as if road pricing is now more or less inevitable.

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