Two Tier Tax

The government is thinking about implementing a new ‘two-tier’ Vehicle Excise Duty policy which would mean that those using Motorways and A-roads would have to pay a higher tax than those using small roads.

A question of revenue

The current VED rates bring in around £6 billion a year. The government is concerned that the new breed of fuel efficient vehicles becoming increasingly popular is going to drive down road tax revenues. The current system taxes those fuel guzzlers and is based on the amount of carbon dioxide produced per kilometre. This is just one of a few options being entertained by ministers.

How?

The system would be implemented by using automatic number plate recognition cameras to look at people’s number plates on motorways. These would be very much like the cameras used in congestion charging in London or bus lane cameras. The technology and infrastructure has already been developed by technology giant IBM and is in place to see such measures take effect soon.

Protest

Many notable motor companies, including motor insurance companies are concerned about what appears to be yet another attack on motorists. There is also a worry that there will be congestion on small but crucial roads, as well as the prospect of many travelling longer distances to avoid motorways thus creating more pollution. More congestion itself would also lead to more pollution due to idling engines as well as inefficient urban speeds.

Another option has been the introduction of privately controlled road tolls or a one-off sales tax on new cars. Ultimately, implementing such policies without considering every single possible impact would be foolhardy to say the least. What we can be sure of is that issues will spring up in the Treasury’s continuing quest to replenish its coffers post Credit Crunch and to balance the ever pessimistic budgets.

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