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Would pay-as-you-drive be a better means of vehicle taxation?

(Rosemary Roberts / Alamy Stock Photo)

Silviya Barrett

Silviya Barrett

3 min read

With more and more electric vehicles on our roads, it is increasingly clear that the current system of vehicle taxation is no longer fit for purpose; what is less clear is what its replacement will look like.

Distance-based road pricing, or pay-as-you-drive, is one option that is very much back on the agenda. Pay-as-you-drive has been explored before, largely as a way to tackle congestion and emissions, but now it is more urgently needed to ensure the tax system keeps pace with the transition to net-zero. Pay-as-you-drive is supported by both the independent Climate Change Committee and the cross-party House of Commons Transport Committee. Despite this, policymakers have been reluctant to act due to hostility to past proposals. But it is many years now since the public mood has been tested, so at Campaign for Better Transport we examined more than 3,000 United Kingdom drivers’ and non-drivers’ views for our latest report, Pay-as-you-drive: the British public’s views on vehicle taxation reform. We found that, far from being an unacceptable concept, the majority of people now believe pay-as-you-drive can be implemented fairly and could in fact save most drivers money.

Our report found that three out of five respondents (60 per cent) believe vehicle taxation needs reforming, with half (49 per cent) supporting the idea of replacing fuel duty and vehicle excise duty with pay-as-you-drive, compared to one in six (18 per cent) opposing it. Support was even higher among electric vehicle drivers, with a third (66 per cent) supporting pay-as-you-drive.

We also found a number of measures could further increase public support for a pay-as-you-drive scheme. These included a commitment to raise no more than fuel duty and vehicle excise duty currently do and focusing on ensuring fiscal responsibility with the transition to zero-emission vehicles as the main reason for reform. Drivers felt having greater transparency would enable them to budget better, putting them back in control by paying less if they drive less to help with the cost of living. Ensuring a proportion of the revenue is allocated for road maintenance and public transport improvements would also make people more supportive, as would having an arm’s length body set and review emission standards and charging rates annually, rather than central government.

Many of the common concerns around road pricing raised during the course of the research – things like protecting people’s privacy and not penalising people who need to drive – proved to be surmountable with a well-designed scheme. In fact, support for road pricing increased among the survey group (from 41 per cent to 49 per cent) over the course of the research once the scheme was fully explained, proving that public concerns about road pricing can be overcome.

There are plenty of options for how such a scheme could be introduced, ranging from a pilot for electric vehicles to replacing fuel duty and vehicle excise duty with a fully “smart” scheme with a varied pricing structure, replacing any pre-existing local road charging schemes. A tax-free mileage allowance could help those in very remote rural areas and give the government the ability to provide targeted “tax cuts” to specific groups.

Pay-as-you-drive is not only a good idea. It is becoming a necessity. Government needs to act, and opposition parties need to play a constructive role in return. Establishing a cross-party commission before the next general election would help secure agreement on the case for reform with a view to having a pay-as-you-drive scheme ready for implementation by 2025. Our report, which shows widespread public support for the concept, should give policymakers the courage to do so.

Silviya Barrett is director of policy and research at Campaign for Better Transport

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