22 June 2007
We received a petition asking:
"We the undersigned petition the Prime Minister to Scrap Road Tax and Tolls in favour of Tax on Fuel."
Read the Government’s response
Vehicle Excise Duty (VED and colloquially known as Road Tax) provides an important source of Government revenues to fund public services, raising £5 billion of the total £485.3 billion revenues in 2005-06.
The Government believes that VED ensures all motorists contribute to the fixed costs incurred in maintaining the road network, and that it is an invaluable aid in ensuring compliance with MOT and insurance certification. Without VED we would still need to maintain a vehicle record and pay for a system for enforcing these requirements. It is doubtful whether any alternative system would be as effective.
Since 2001 it has also, in respect of cars registered from 1 March 2001 onwards, been graduated by CO2 emissions. This provides a signal to motorists of the environmental impacts of their potential choice of car, that would be lost were Vehicle Excise Duty to be abolished.
The Chancellor’s 2007 Budget sharpened that signal by building on Budget 2006’s introduction of an additional band for the most polluting cars and the lowering of rates for low carbon cars. Budget 2007 further reduced and then froze the rate for low carbon band B cars until 2010-11, increased the rate for the most polluting in band G in 2007-08 and again for 2008-09 with a freeze for the following year, while the rate for the very lowest carbon cars remains zero. Having taken into account all relevant economic, social and environmental factors, the Chancellor decided that this was the most balanced approach. The sharpening of environmental signals within Vehicle Excise Duty will help deliver a 0.1-0.17 Million tonnes of Carbon reduction in CO2 emissions by 2020. Abolishing VED would lose this important environmental signal.
There are also some costs of road use that are not captured adequately by road fuel duty. For example, the damage done by heavy goods vehicles depends on the weight they carry and how that weight is distributed. Vehicle Excise Duty for heavy goods vehicles is designed to reflect this, at least in part.
Finally, the Government believes that to load the full burden of motoring taxes onto fuel duties would hit groups such as hauliers and bus operators. It would also disadvantage some people, like those disabled drivers who have the greatest mobility problems, who currently benefit from not having to pay Vehicle Excise Duty.
The Government will continue to seek to reduce emissions from transport through using tax and other mechanisms, while also taking into account other factors such as impacts on motorists, the wider economy, on social inclusion and road safety."
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