Today the Transport Select Committee have said that the public do not trust the Government with road taxation. The report says that changes to Vehicle Excise Duty have damaged the reputation of green taxes, essentially meaning that people do not believe that taxes are used for anything other than old-fashioned revenue-raising. The Committee found that:
It is therefore small wonder that the public do not trust the Government with road taxes, and by extension green taxes. It seems to be confirmation of the hijacking of a fashionable concept to justify taxing motorists. The reality is that they merely seek revenue to mend the broken public finances.
Green taxes aim to correct the negative externalities caused by emissions. The announcement of the changes to Vehicle Excise Duty in the 2008 budget were apparently designed to make drivers pay for the pollution caused by their car based on fuel consumption. But it was a tax on car ownership, as opposed to car usage; the rise in duties hit owners of older cars, simply for owning older cars. Families on tight budgets were rightly outraged.
Further, a tax on car ownership clearly doesn’t pick up the tab for emissions. If two people own a Jeep and one driver clocks up 10,000 miles in a year while the other manages only 500, the excise duty is the same. You can’t dress this tax up in green clothes.
The Government have delayed the increases in Vehicle Excise Duty rates and agreed to stagger their introduction. Yet the Committee’s report has reflected public outrage over the underhanded methods of the Government. In fact, it has probably underestimated it somewhat. With the citizens of Manchester turning down a congestion charging scheme in their city centre, the Government clearly need to rethink transport policy.
The first step should be to acknowledge that motoring taxes have gone way beyond the ‘green tax’ level. Research – including our paper outlining the case against further green taxes and evidence to the Institute for Fiscal Studies Mirrlees Review – show that we already overpay for the social cost of Britain’s CO2 emissions.
If you drive a car, or happen to take flights to go on holiday, use our green tax calculator to work out how much you already pay in green taxes. I’m sure you’ll find it’s already more than enough.