Miles ahead

Think tank: Social Market Foundation

Author(s): Scott Corfe

May 16, 2022

This report from UK think tank the Social Market Foundation looks at road pricing as a fairer form of motoring taxation.

This report from Social Market Foundation think tank sets out a fairer motoring taxation regime, through a nationwide road pricing system As we transition towards electric vehicles that don’t incur fuel duty, the Treasury faces a revenue loss of £30bn each year. Given the unpopularity of fuel duty, this report explores the case for introducing a nationwide road pricing system in the UK – setting out a model that is fairer than fuel duty, replaces lost tax revenue, and reduces the burden on low-income households. It would charge you a flat rate per mile, with a handy free mileage allowance. Recommendations – so that road pricing addresses unfair tax burden, increasing congestion due to EVs, and public trust in motoring taxation, Government should:

  • Develop the infrastructure to support a simple national-level road pricing scheme, with a flat per mile rate and a free mileage allowance – and set out a timetable for implementing it;
  • Reduce the burden on lower-income motorists during the transition period from internal combustion engine (ICE) vehicles to EVs by abolishing or reducing fuel duty at the same time as road pricing is implemented. If fuel duty were to be abolished, an ICE vehicle road pricing surcharge should be introduced to retain incentives to shift to EVs;
  • Establish a Road Pricing Commission to improve transparency around motoring taxation and trust around its aims;
  • Deal with localised congestion by complementing a flat-rate national road pricing scheme with localised road pricing initiatives such as congestion charges in cities.