Lib Dem road pricing won't be revenue neutral

May 04, 2010 12:40 PM

The Lib Dem plans to introduce road pricing has been met with fierce criticism from 40 council leaders. They argue such a system would tax the poor off trunk roads and motorways and onto residential roads, creating “two classes of road”. The Lib Dems however said that the introduction of the system

“would be revenue neutral for motorists, with revenue from cars used to abolish Vehicle Excise Duty and reduce fuel duty”.

But the claim that road pricing would be revenue neutral for motorist’s flies in the face of reality as the tracking and charging of vehicles is a very expensive system. Indeed council leaders estimate the scheme would cost up to £28 billion to set up and as much as another £23 billion to run annually. This means that drivers would be charged between 10.7p per mile and 30.1p a mile to drive on trunk roads and motorways for the scheme to break even. The annual total cost of scheme - for the average driver who travels 9,000 miles a year - would be between £963 and £2,709.  That is before you actually get to any charges that might replace Vehicle Excise Duty or Fuel Duty.

The party claims that revenue gained from motorists would be used to abolish Vehicle Excise Duty and reduce Fuel Duty. However even after the £963 - £2,709 cost of the scheme, can motorists trust that this new mechanism won’t be used to rip them off even more than they are now?  The Liberal Democrats have always been ardent proponents of ‘green taxes’, and there are proposals to increase them in their manifesto.  If they got their hands on yet another way of taking money from hard pressed motorists, with environmental concerns as a handy fig leaf, do we really think that won’t mean higher taxes over the years?

As our research shows, motorists are already massively overtaxed.  This policy would require adding to that burden just to pay for the infrastructure and it would enable government to hit people with new charges over time.  Drivers should reject this rip off. 

The Lib Dem plans to introduce road pricing has been met with fierce criticism from 40 council leaders. They argue such a system would tax the poor off trunk roads and motorways and onto residential roads, creating “two classes of road”. The Lib Dems however said that the introduction of the system

“would be revenue neutral for motorists, with revenue from cars used to abolish Vehicle Excise Duty and reduce fuel duty”.

But the claim that road pricing would be revenue neutral for motorist’s flies in the face of reality as the tracking and charging of vehicles is a very expensive system. Indeed council leaders estimate the scheme would cost up to £28 billion to set up and as much as another £23 billion to run annually. This means that drivers would be charged between 10.7p per mile and 30.1p a mile to drive on trunk roads and motorways for the scheme to break even. The annual total cost of scheme - for the average driver who travels 9,000 miles a year - would be between £963 and £2,709.  That is before you actually get to any charges that might replace Vehicle Excise Duty or Fuel Duty.

The party claims that revenue gained from motorists would be used to abolish Vehicle Excise Duty and reduce Fuel Duty. However even after the £963 - £2,709 cost of the scheme, can motorists trust that this new mechanism won’t be used to rip them off even more than they are now?  The Liberal Democrats have always been ardent proponents of ‘green taxes’, and there are proposals to increase them in their manifesto.  If they got their hands on yet another way of taking money from hard pressed motorists, with environmental concerns as a handy fig leaf, do we really think that won’t mean higher taxes over the years?

As our research shows, motorists are already massively overtaxed.  This policy would require adding to that burden just to pay for the infrastructure and it would enable government to hit people with new charges over time.  Drivers should reject this rip off. 

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