Financial News
- 16 May 2012, 13:21
Fears Tax Shortfall May Lead To Road Tolls
Drivers could face toll charges or a 50% rise in fuel duty in future years to cover a £13bn hole in Treasury coffers, according to a new report.
Revenue from vehicle excise and fuel duty is expected to plunge over the next 15 years as more drivers turn to eco-friendly cars.
Fuel duty collected by the Exchequer currently stands at 1.7% of gross domestic product (GDP) but this is due to fall to 1.1% of GDP by 2029.
Vehicle excise duty (VED) will also drop over this period, from 0.4% of GDP to 0.1%, creating a combined fall that leads to the £13bn shortfall.
The Treasury would need to raise fuel duty from 58p per litre to 87p to fill the black hole, according to the report by the Institute of Fiscal Studies and the RAC Foundation.
Foundation director Professor Stephen Glaister said: "Clearly there is no guarantee that future rises in duty rates will be limited to inflation, as is current policy.
"As drivers endure record prices at the pumps they might be surprised to learn that future governments face a drought in motoring tax income.
"The irony is that while ministers encourage us to buy greener, leaner cars, they are being forced to look at ways of clawing back the money motorists think they will be saving.
"This isn't scaremongering. The Treasury has already announced a review of VED bands to ensure drivers make a fair contribution to the public finances even as cars become more fuel-efficient."
The report called for a "radical overhaul" of road taxation and suggested there was a "compelling" case for road charging in the UK.
It proposed a system where drivers are charged by the mile and face higher charges if they are travelling through busy areas at peak times.
"Such a move would generate substantial economic efficiency gains from reduced congestion, reduce the tax levied on the majority of miles driven, leave many (particularly rural) motorists better off, and provide a stable long-term footing for motoring taxes without necessarily raising net additional revenue from drivers," the report said.
IFS director Paul Johnson said motoring taxation did not reflect the costs drivers impose on others and that revenue from petrol was set to fall.
He added: "A national system of charging related to mileage and congestion, largely replacing the current system of fuel taxation, would help solve both those problems."
what do you think?
John Poole
Us drivers are damned if we do and damned if we don't .
Juls Adams
ban immigrants from living here.that will save billions instantly.people cant afford a car now.this will only get worse.stop international aid and have nothing to do with the eu.no more bank bailouts.no more benifits for people with more than one child.all of a sudden ive saved billions.it aint rocket science
David Wragg
Well said, and while are about it, let's save another GBP 9bn on overseas aid, and then let's leave the EU as we are one of the highest net contributors.
Derek Whyman
Hang on a minute. I'm for most of what you said. but we are an island what have we got in reserve to sustain us. We have to import everything we use virtuly. All our major companies are foreign owned now.
Steve Johnson
I agree. The Australians have got it right. No job, no skills or enough money to live unsupported = NO ENTRY.
Roger Siviter
I agree with what you say Juls except for the EU. Without the EU we are sunk. It's the worlds biggest single market and if we are to get the trading benefits, we need to be in it and ensuring it works or we end up like some banana republic with as much clout as Haiti and that's an undeniable fact! Think China, think India, think USA, think South America!
David Wragg
This is something they never think about! Fewer smokers, fewer drinkers, less petrol and diesel used, so less tax revenue! Simple. Nevertheless, there is something badly wrong with our national finances with almost everything taxed and taxes only seem to go one way, and that is up, yet our roads are awful, our defences have been abandoned, and the country really is very rundown. I think we need a radical root and branch reappraisal of almost everything. The Conservatives once had some good ideas, such as a flat rate of income tax and improved pensions rather than having to apply for supplementary benefits, but there hasn't been a single good idea out of this mess of a coalition.
David Wragg
Just another thought. Road tolls would be very costly to implement, or is this a devious way of ending unemployment? You can't have massive fuel taxation, road tax and road tolls, although no doubt they would like to try.
Steve Johnson
Perhaps our salaries should be paid directly to the Government so that they can take what they want (oops...sorry, need), then they could give us a few coppers a week to exist. Job done!
Steven Greengiant Turner
Charged by the mile! That will do our country a lot of good. Heavy prices paid by the haulage firms, being passed on to the consumer. Everything will become much more expensive. When are Governments going to realise that higher taxes means they will lose out in the end. Less money to go round, more businesses shutting down, less jobs, more benefits paid out. Then because of another shortfall in taxes, the Government will increase them. Round and round we go. As for the possibility of motorist's being better of, hahaha, NO CHANCE! No matter what new taxation system is brought out, the Government will always make sure they are better of. Maybe 10p a mile when first introduced, but as soon as people cut their milage down, it will quickly go upto 30 or 40p a mile.
Scott White
So we're looking at closer to £2 a litre ? And no doubt 20-30% more on road tax. Is it really worth owning a car anymore ?
David Rankin
money money all we get from this GOV, stop giving junkies methadone, stop giving people in prison a 5* hotel they are prisoners,and dont give people who walk into this country 26.000£ a year and never paid a penny tax in there life,that would save billions upon billions,but no this country is run by (IDIOTS)
bobh_385
Yep we will soon be back in medieval times,no cars,no tv's,no power,scraping a living from the land.At least there will be no unemployment though.The politicos will be ok though just like the fat bishops of history.
Robert Padfield
Well said Juls, we need a revolution, get out of the EU and make England great again, all non working foreigners out. The NHS cannot cope, the Education system cannot cope, the Roads cannot cope, the Law system cannot cope and of course the Welfare system that the English who paid in to it is wasting it on those who havent. This is not racist but realism we need to close the doors to all but those who make the effort.
d and d Phillips
Where's all the money gone? We've been ripped over for donkey's years.................
Peter Schabel
the war in afganisthan has cost 1.5 billion up to now plus all the billions he gives in aid to other countries this is money we dont have so we borrow it and then pay it back with interest
Jonathan Goodwin-Self
This Government and the Trasury are totally ridiculous. If they do this there could be the entire population going to Westminster and destroying all these idiotic lots in a Civil war.
Jonathan Goodwin-Self
Cameron is not a Prime Minister, he is a dictator and his chancellor is as bad as him. 80% of the population now want a new General Election and the same amount want a referendum on the EU. But these dictators are ignoring us. So we need to find them and say goodbye.
Alan Todd
England for the English no more immigrants to give our taxes to .Instead of giving money to other countries give it to the people who pay taxes.
Roger W. Patrick
More ways to tax Joe Public. They are beginning to clutch at more and more raggedy ways of taking tax off us!
robert
THIS LOT ARE DEFINITELY OUT OF TOUCH WITH REALITY.RAISE THIS TAX ,RAISE THAT TAX,PUT MORE PEOPLE OUT OF WORK,PEOPLE SELL CARS, DONT BUY PETROL/DIESAL,CANT AFFORD BUS FARE,NO MONEY TO SPEND,RESULT NO TAX PAID.ONE BIG JOKE AFTER ANOTHER, YAWNZZZZZZZZZZZZZZZZZZZZZZ.
Charles Rickards
Or how about spending the taxes you do raise more efficiently? Get rid of all of the 'Non' jobs in the public sector and stop wasting money on stupid public inquiries that take 2 years to come up with an answer that a single cell organism could have worked out. Those that drive gas guzzlers pay more tax as do those who do a high mileage.
Nick Butler
Why do we bother contributing to this country only for the revenue to be given away to all the no hopers and malingerers. I think it's time I gave up work, stopped paying any taxes and rely upon others to support me. I'm sick of deadbeat government, MPs lining their own pockets. It's about time Cameron gre some balls and told Clegg where to go.
Fleur Black
10:09am on 15/5/2012
Th eGovernmnet needs to implement LIL - Local Internet Levy - to recycle some of the billions that are extracted from all towns and sent abroad. This coudl be quickly done by using postcode of payments made on the internet.