Azara Blog: Lib Dems want to introduce a new road tax

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Date published: 2008/06/03

The BBC says:

Road tax and fuel duty would be axed - but drivers would be charged up to 12p a kilometre - under plans put forward by Liberal Democrat leader Nick Clegg.

The most polluting vehicles would incur a higher "showroom tax" and hauliers face a national lorry road user charge under a "sustainable and fair" system.

Mr Clegg also promised more high speed rail links and surcharges on most flights under a Lib Dem government.

He said the UK was "grinding to a halt" as travel costs continued to rise.

Mr Clegg's plans for a transport revamp come as Gordon Brown faces pressure over plans to increase road tax on more polluting cars bought since 2001

However, Mr Clegg said his own higher VED rates - rising to £2,000 a year on the most polluting cars - would only be a temporary measure until the tax was scrapped altogether within 10 years of a Lib Dem government.

At that time, fuel duty would be cut as well and road charging introduced at 8p a kilometre for motorways and trunk road.

This could increase to around 12p for cars that pump out the most greenhouse gas emissions, while the most efficient vehicles would pay nothing.

As usual with the Lib Dems it is all a bit wooly. So now he wants to charge an extortionate £2000 pounds per year tax on the "most polluting" cars, so around five times the "normal" rate, but in ten years he is going to charge them only one and a half times as much (12p versus 8p). Well that makes sense.

Current fuel duty in the UK, when you add in VAT (which is a tax on the tax) amounts to around 61.5 p per litre. Ignore the proposed "sinner's" tax of 12p per km and concentrate on the "normal" tax of 8p per km. So the break-even point for a driver on whether they are paying more or less tax under the current system versus the proposed Lib Dem system is 61.5/8 = 7.69 km per litre, or around 21.6 mpg (Imperial gallon). Any driver whose car does worse mileage than this is better off, and any driver whose car does better mileage than this is worse off. Yes, this is backwards.

That is the real problem with the Lib Dem proposal. This new road tax bears little relation to the amount of pollution actually caused. There is the crude 8p / 12p banding. But other than that, there is no incentive to drive more fuel efficient cars. It is a backwards step. Further, because of the huge cost of implementing this kind of road tax compared with fuel duty, the average driver is bound to be worse off (someone has to pay for the implementation and it is not going to be the non-drivers of the world).

Unfortunately the Lib Dems, like the other two main political parties in fact, are more interested in screwing car drivers (and airline passengers) than anything else. This is one reason the transport system in the UK is a mess. The ruling elite are driven by dogma and have no clue about transport design.

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