The tax revolution hidden inside yesterday's autumn statement
Source : The tax revolution hidden inside yesterday's autumn statement
While George Osborne’s statement didn’t hold any nasty surprises for motorists inside the immediate future, the item will be paving the way for more serious tax measures inside the next few years
Yesterday’s autumn statement wasn’t too much of a shock for hard-pressed motorists, however there’s trouble to come, primarily inside 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 in addition to the Treasury says the item expects to raise an extra £2.3bn over the four-year period to 2020.
Clearly, a policy-decider has figured in which 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 inside the Middle East allegedly trying to choke off America’s brand new shale gas industry by driving down the cost of a barrel of oil).
Of course, the Treasury, which needs every penny the item can get its hands on when the UK will be borrowing £78bn This specific year, won’t just sit by in addition to watch its income via fuel duty gently sink as drivers buy more economical cars in addition to 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 specific explanation doesn’t seem to make immediate sense, however I suspect the item will be hinting in which 2021 will mark a major change inside the way motorists are taxed.
More immediately, the sweetener for the planned increase in fuel taxes comes inside the form of investment inside the roads. Spending This specific year will be a miserable £1.8bn, however the item will rise to £2.5bn in 2017-18 in addition to £3.9bn in 2020-21.
The highway maintenance fund, however, will be stuck at £1bn a year for the next a few years, however with an extra £250m for pothole abatement thrown in. £600m has also been allocated for the next a few years to support the ‘uptake in addition to manufacturing of ultra-low emission vehicles inside the UK’.
the item’s worth comparing spending on the roads in addition to on rail in 2020-21. While road investment rises to a £3.9bn (via £1.8bn This specific year), spending on maintaining the existing rail network will be £5.3bn in addition to another £4.8bn will be spent for the HS2 line via London to Birmingham.
The upshot will be in which spending on the railways will be a touch over £10bn in 2020-21, while the roads network gets just £3.9bn. in which’s the issue with rail investment: construction costs are very high, the infrastructure requires a lot of expensive maintenance in addition to ticket prices have to be subsidised because the real cost of a rail journey will be more than most could afford.
The Autumn statement says This specific £15bn investment over a few years ‘…inside the Roads Investment Strategy period will include resurfacing more than 80% of the strategic road network, in addition to delivering more than 1300 miles of additional lanes, the equivalent of travelling via Bristol to Newcastle four times.’
However, the item also says ‘Future roads investment will be underpinned by a brand new 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 in addition to 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, the item can be decoupled via a car’s CO2 rating (after all, all vehicles are equal in terms of road use) in addition to then progressively raised.
in which means funding for road maintenance in addition to what few brand new roads we’ll get, could then be progressively shifted via general taxation in addition to lumped directly on to car owners. If This specific happens, complaints against rises in VED could be countered by the argument in which ‘every penny will be spent on the roads network’.
The tax regime for drivers won’t change much for the next decade, however I suspect a revolution will be waiting inside the wings.
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