Cutting road transport emissions could cost billions in lost taxes
Policy Exchange claims as much as £23 billion annually could be lost
A newly released report suggests there could be as much as £23 billion lost in annual taxes by 2030 if UK carbon targets are achieved.
The report, published by Policy Exchange, claims fuel duty tax receipts could be impacted by up to £170 billion over the next 13 years.
It is indicated in the report that whilst the UK has made significant reductions in greenhouse gas emissions – achieving a 38 per cent cut since 1990 – the government has failed to provide an effective strategy to counter for the impact on fuel duty tax receipts, as well as failing to provide a clear answer for who is in charge of any such strategy.
Due to the 2008 Climate Change Act, the UK government aims to drop greenhouse gas emissions by 80 per cent from the 1990 baseline – a further 42 per cent than what has so far been achieved.
Currently the treasury raises £28 billion from fuel duty and a further £6 billion in road tax annually, meaning a switch from conventional vehicles would likely lead to a significant drop in tax receipts.
Policy Exchange have called on the government to provide a clearer strategy in delivering carbon targets set out in the Fifth Carbon Budget and ensure that consumers are at the heart of that.
Suggestions for other means of revenue to counter any drop-in fuel duty include phasing out government grants for electric vehicles and plug-in hybrids, scrapping European targets for 10 per cent renewable transport fuels and also avoiding setting targets for the number of ultra-low emissions vehicles on the road.
By Ryan Hirons
