Pay-per-mile scheme proposes to scrap fuel duty and vehicle excise duty, and instead charge motorists per mile. An extra £2.3 million per day could be raised through the scheme
17 July 2017

The prestigious Wolfson Economics Prize has been awarded to a scheme that calls for the introduction of a per-mile car tax in place of fuel duty and vehicle excise duty

UCL politics and urban planning graduate Gergely Raccuja suggests in his submission, titled “Paying for road use could be miles better”, that insurers collect drivers’ road bill at the same time as their insurance premiums, reducing administration costs. 

Raccuja also claims that the scheme would be more representative of drivers’ usage of the roads, and would be fairer to lower-mileage car owners. Lighter and cleaner cars would be charged less than heavier, dirtier cars, but no numbers have been put to the proposal yet.

The scheme would charge drivers a fee per mile after the first 3000 free miles, which would raise £2.3m per day for the treasury, in place of the increasingly meagre fuel duty revenue. Fuel duty and vehicle excise duty would be scrapped to make way for it, and the extra money generated could then be put into fixing the UK’s pothole-scarred roads. Raccuja says that Britain could be pothole free within half a decade under the scheme. 

Raccuja was awarded the prize - which includes £250,000 - by a panel of judges comprising former chancellor Lord Darling, Legal & General chairman Sir John Kingman, economist Bridget Rosewell, former deputy Mayor of London for transport Isabel Dedring and The Times associate editor Lord Finkelstein. 

The idea also benefited from tweaks made by the RAC Foundation, the RAC’s motoring research arm. 

The Government’s latest vehicle excise duty changes have come under fire, with critics claiming that the rules are not representative of the UK’s car industry and unfairly penalise more expensive, but less emissions-heavy, cars such as the Mitsubishi Outlander PHEV. Mitsubishi CEO Lance Bradley was particularly outspoken about the changes. 

Read more:

Budget 2017: fuel duty frozen, traffic and diesel tax measures

Car tax: everything you need to know about vehicle excise duty

The pothole in the Government’s road repair plan

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Comments
12

17 July 2017

Doesnt the current fuel duty acheive this without all the required admin and vehicle (personnel) tracking? Low miles in an economical car = low tax, high miles in an uneconomical car = high tax.

 

 

17 July 2017

I logged in to make this very point. What a waste of a prize. 

17 July 2017

£250,000 for an idea that's been bandited around for the last 5 years.

I've an idea how about putting an edible piece of food between 2 slices of bread, I'll can it a breadwich. Where's my money!

 

Hydrogen cars just went POP

17 July 2017

As mooted on hundreds of occasions, scrap road tax and add to fuel duty. Can I have the £250000 now?

Spanner

18 July 2017

The idea of adding to fuel duty and scrapping road tax would work today, but it won't work in an increasingly electrified future. There is no way to differentiate between electricity used for charging EVs and electricity used for other purposes. You can't dye non-road-use electricity red like we do with diesel.

17 July 2017

seriously? it's basically the business model of income tax. is it a workaround for the problem of putting fuel duty on charged-at-home ev?why can't they just scrap the lot, introduce a "fossil duty" to keep petrol/diesel sufficiently expensive that it'll encourage people to not be overly wasteful with it, whilst "opening the door" for a more proper uptake of biodiesel and similar, which are more carbon balanced as they were initially grown instead of drilled/mined. no, biodiesel/methanol/ethanol can't replace everything, but electric's helping out with that.then, when it all begins to even out to a steady system and as far as vehicles are concerned the actual users can do very little to change the environmental situation, actually start raising taxation funding in a more balanced way instead of simply collaring vehicles as an easy target?is it only me who finds this about raising money for pothole repair mildly comical, considering that there was never a funding issue for speed bumps and chicanes?

17 July 2017
What about the foreign cars? Will they pay for using UK roads? Will they benefit from cheap fuel? What about if I will go abroad for a euro trip? Making miles on continent paying fuel duty tax in fuel and then again paying for the miles back in home? Absurd! What a load of crap. Leave it as it is.

17 July 2017

The UK government loves nothing more than complicated, expensive to collect and administer taxes. They prefer to employ an army of civil servants with gold plated pensions who can retire early while the rest of the population works longer and longer to pay for it.  The common sense, simplified approach has already been debated over and over for decades, but no Chancellor ever listens to common sense arguments.

18 July 2017
steve-p wrote:

The UK government loves nothing more than complicated, expensive to collect and administer taxes. They prefer to employ an army of civil servants with gold plated pensions who can retire early while the rest of the population works longer and longer to pay for it.  The common sense, simplified approach has already been debated over and over for decades, but no Chancellor ever listens to common sense arguments.

completely correct. How the tax system works. If you earn over £17 on a Tuesday, and have a Halfords toolkit in the back of your car, road tax is £9m. However, if you are a member of your local sailing club, have a picture of a hedgehog, and your car emits only pigeons, it is £7 between the hours of 9 & 5.

Exactly the same for income tax too.

Spanner

18 July 2017

"Dear Mr Bloggs, please find enclosed your monthly charge for road usage. During the course of our monitoring, we found that you exceeded the speed limit by over 2 mph on 17 occasions. We have reported this matter top the relevant authorities and they will be in touch."

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