The tax revolution hidden inside the Autumn Statement

Monday, October 17th, 2016 - autos, cars, motoring, news

Source : The tax revolution hidden inside the Autumn Statement

The tax revolution hidden inside the Autumn Statement While George Osborne’s statement didn’t hold any nasty surprises for motorists from the immediate future, This kind of is usually paving the way for more serious tax measures from the next few years


Yesterday’s autumn statement wasn’t too much of a shock for hard-pressed motorists, although there’s trouble to come, primarily from the form of the notorious fuel duty escalator being revived.

Tax on road fuel will be raised automatically by the rate of inflation via April next year along with the Treasury says This kind of expects to raise an extra £2.3bn over the four-year period to 2020.

Clearly, a policy-decider has figured that will oil prices will remain relatively low for the next few years, so drivers will have lost some of the fuel savings of recent times (there’s a huge oversupply of oil at the moment, partly caused by traditional pumpers from the Middle East allegedly trying to choke off America’s fresh shale gas industry by driving down the cost of a barrel of oil).

Of course, the Treasury, which needs every penny This kind of can get its hands on when the UK is usually borrowing £78bn This kind of year, won’t just sit by along with watch its income via fuel duty gently sink as drivers buy more economical cars along with drive them less.

The Treasury also expects to raise £1.4bn by keeping the 3% diesel supplement for company car taxation until 2021, due to ‘the slower-than-expected introduction of more rigorous EU emissions testing’. This kind of explanation doesn’t seem to make immediate sense, although I suspect This kind of is usually hinting that will 2021 will mark a major change from the way motorists are taxed.

More immediately, the sweetener for the planned increase in fuel taxes comes from the form of investment from the roads. Spending This kind of year is usually a miserable £1.8bn, although This kind of will rise to £2.5bn in 2017-18 along with £3.9bn in 2020-21.

The highway maintenance fund, however, is usually stuck at £1bn a year for the next a few years, although with an extra £250m for pothole abatement thrown in. £600m has also been allocated for the next a few years to support the ‘uptake along with manufacturing of ultra-low emission vehicles from the UK’.

This kind of’s worth comparing spending on the roads along with on rail in 2020-21. While road investment rises to a £3.9bn (via £1.8bn This kind of year), spending on maintaining the existing rail network will be £5.3bn along with another £4.8bn will be spent for the HS2 line via London to Birmingham.

The upshot is usually that will spending on the railways will be a touch over £10bn in 2020-21, while the roads network gets just £3.9bn. that will’s the issue with rail investment: construction costs are very high, the infrastructure requires a lot of expensive maintenance along with ticket prices have to be subsidised because the real cost of a rail journey is usually more than most could afford.

The Autumn statement says This kind of £15bn investment over a few years ‘…from the Roads Investment Strategy period will include resurfacing more than 80% of the strategic road network, along with delivering more than 1300 miles of additional lanes, the equivalent of travelling via Bristol to Newcastle four times.’

However, This kind of also says ‘Future roads investment will be underpinned by a fresh Roads Fund paid for directly via the revenues of Vehicle Excise Duty via 2020-21.’

With carmakers required by law to hit a fleet average CO2 of around 100g/km by 2020, the Treasury will have already worked out the loss of income via fuel along with VED taxes as cars become much more fuel-efficient at the beginning of the next decade.

Reading between the lines, I see a hint of the future of roads funding. Once the VED becomes the fund for road-building in 2020-21, This kind of can be decoupled via a car’s CO2 rating (after all, all vehicles are equal in terms of road use) along with then progressively raised.

that will means funding for road maintenance along with what few fresh roads we’ll get, could then be progressively shifted via general taxation along with lumped directly on to car owners. If This kind of happens, complaints against rises in VED would likely be countered by the argument that will ‘every penny is usually spent on the roads network’.

The tax regime for drivers won’t change much for the next decade, although I suspect a revolution is usually waiting from the wings.

by via Autocar RSS Feed

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