Intelligent fuel duty (think piece) 02 Nov 2011

A fairer way of paying to drive

In this discussion paper Phil Carey - a former senior civil servant at the DfT - outlines one possible component of reform of motoring taxation which would increase fairness whilst at the same time helping to achieve the government’s objectives for transport.

There is an attractive opportunity to make more intelligent use of the well established fuel duty mechanism, focusing the cost burden on urban driving in peak periods, where alternatives are more likely to be available, and
reducing the costs of driving in quieter times and places.

This entails setting fuel duty at a level that more fully reflects the costs of peak-time driving, but then offering all drivers a greater or lesser rebate off that price when paying for fuel, depending on how much of their driving since they last filled up had been in less congested conditions. Evidence of entitlement to rebate would be generated by a GPS-enabled unit carried in the car or van, should the driver wish to participate in the scheme.