Treasury plans to raise around £2bn in road taxes before 2011 will cost motorists four times more than would be saved by the dropping of the proposed October 2p fuel duty increase, the RAC Foundation said today.
The foundation is urging the Treasury to carry out a root-and-branch review of motoring taxation, taking account of the impact of sustained high oil prices on family spending, and the impact of reduced mobility on the UK economy as a whole.
The tax changes announced in the last Budget show that the government is looking to motorists to fund far more than their fair share of general government spending, the foundation said.
It added that in 2009, more than 60% of Budget 2008 additional revenues will come from motoring taxes, while in 2010, more than 90% of Budget 2008 additional revenues will come from motoring taxes.
These changes are described in the Budget as measures ‘protecting the environment’.
However, the RAC Foundation said there was no environmental case for raising motoring taxes and that road users were the only energy users covering their carbon costs.
It added that £1.2bn of the increase comes from planned changes to vehicle excise duty (VED). The foundation has criticised the retrospective nature of the changes and the fact that they are not revenue-neutral.
The foundation said it believed urgent action to rethink motoring taxation was needed, as the road user was ‘paying more and more for an ever-poorer level of service’.
It added that the difference between taxes taken from the motorist and investment returned to the road network had soared more than 400% since the mid 1970s.
Spend on roads
In 1975 income from motorists (£11.6bn in 2006 prices) was broadly equal to spending on the road network (£11.1bn).
The foundation said the government now took four times as much from the motorist (£31.2bn) as it spends on the roads (£8.2bn).
RAC director Stephen Glaister, said: ‘The Chancellor (Alistair Darling) may pull a populist rabbit out of the hat by scrapping the October 2p rise, but this will be a drop in the ocean compared to his plans to take an extra £2bn from the road user’s pockets by 2011.’
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