IFS Study Suggests "Compelling Case' For Road Charges

A new report by the Institute for Fiscal Studies (IFS), has suggested there is a "compelling" case for road charging in the UK, rather than the current system funded by taxes on fuel.

The report, funded by the policy arm of the RAC, suggested a "radical overhaul" of road taxes was needed.

Fuel and Vehicle Excise duties raise about £38bn a year but are set to fall.

Forecasts from the Office for Budget Responsibility predict tax revenues from duties will fall by £13bn a year, at current prices, by 2029, as cars become electrified and more fuel-efficient.

Plugging the gap would require a 50% rise in fuel duty, according to the IFS.

Using the figures it has now recommended moving towards a nationwide system of road charging, including road tolls, to account for this loss of revenue.

The IFS says a solution would be to charge drivers by the mile, with higher pricing in congested areas at peak times. Drivers in the countryside would be likely to pay less.

"Such a move would generate substantial economic efficiency gains from reduced congestion, reduce the tax levied on the majority of miles driven, leave many (particularly rural) motorists better off, and provide a stable long-term footing for motoring taxes without necessarily raising net additional revenue from drivers," the IFS said.

(H/GK)