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news
George OsborneRoad tax is back – Chancellor announces Vehicle Excise Duty reforms that will see money raised reserved for road improvements
It seems there really is a road tax again. In his seventh Budget as chancellor – the first Conservative Budget in 19 years – George Osborne has announced reforms to Vehicle Excise Duty which will see money raised earmarked for road network improvements.
Osborne said:
“I will return this tax to the use for which it was originally intended. I am creating a new roads fund from the end of this decade – every single penny raised from VED in England will go into that fund to pay for that sustained investment our roads so badly need.”
Road tax was abolished in 1937 and replaced by Vehicle Excise Duty, the proceeds of which have up until now gone into the general Treasury fund. References to "road tax" are of course often made by drivers as a means of suggesting they have more right to the roads than cyclists (or indeed than pedestrians or horse riders).
A new system of Vehicle Excise Duty will be brought in for new cars from 2017 and while no extra revenue will be raised, the Chancellor claims it will be "more secure". It will be emissions-based in the first year, after which there will be three levels – zero emission, standard and premium. Around 95 per cent of vehicles are expected to fall into the standard category, which will cost £140 a year.
Under the new system, cars emitting 0g/km CO2 will pay nothing – the same as a cyclist. Or at least it would be the same as a cyclist if a 2010 study hadn’t found that the people who cycle the most are likely to own at least two cars. Cars with a list price above £40,000 will attract a supplement of £310 per year for the first five years in which the standard rate is paid
The Chancellor also froze fuel duty for the rest of the year.
CTC is concerned that today’s announcements could effectively create a 'road fund' and lead to calls for a similar tax on cyclists to pay for the Cycling and Walking Investment Strategy. The original 'Road Fund' was abolished in 1937 thanks to opposition from Chancellor Winston Churchill who argued that spending motor taxes only on roads would lead to motorists assuming a 'moral ownership' of them.
Roger Geffen MBE, Policy and Campaigns Director at CTC, the national cycling charity, said:
"George Osborne has today reversed Winston Churchill's most sensible transport decision. Given this, it is therefore a relief that Parliament and the Prime Minister are already committed to cycling investment, and to 'cycle-proof' all road and traffic schemes to ensure cycling is properly designed into them from the outset.
"However, CTC still believes this is a doubly regressive policy, raising more tax from cleaner cars to build more roads, when councils are struggling to maintain the ones we’ve got. And we still want to know how much the Government will allocate to the promised Cycling and Walking Investment Strategy, and when they will confirm this.”
Jason Torrance, policy director at Sustrans, commented:
"Vehicle Excise Duty is a tax on pollution: those cars which create the most greenhouse gases are taxed most heavily. Siphoning that revenue into a new Roads Fund will inevitably lead to further pollution and undermines its original purpose.
"Over this parliament alone £15bn will be spent on new roads. Research proves that creating more road capacity will lead to increased demand, and therefore more miles driven.
“The Chancellor has kept the tax on fuel frozen at 57.95p a litre for more than four years, which is a populist policy but one which fails the public in that it serves only to lock them into having to use their cars.
“With physical inactivity, pollution and congestion increasing across the UK, investing in cycling and walking is an economic silver bullet and government must act across all departments to secure significant investment. Government must create a Cycling and Walking Investment Strategy that guarantees long-term funding for active travel.”
Alex has written for more cricket publications than the rest of the road.cc team combined. Despite the apparent evidence of this picture, he doesn't especially like cake.
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80 comments
As 'road tax' will be paying for the roads, what will the savings be on Council tax?
None. What this article omits to mention (as did the Chancellor, but not the Treasury's full report) is that this road fund is purely for the "Strategic Road Network". That's operated by Highways England (formerly the Highways Agency) and accounts for only 2%-3% of total road length (although a third of all traffic and two thirds of freight).
Councils' funding will be cut again in September's Spending Review, probably causing more red-faced outrage on the part of Sun-readers who assume that Town Hall Bureaucrats are squandering Their Road Tax.
We should campaign for the associated literature and public information over this new tax to clearly state that cyclists fall into the zero emissions group (along with zero emissions cars).
Why not increase VAT on sale of ALL new cars to 25% and then add a 10% congestion tax to the sale price?
Ring fence 10% of all VED collected for improving cycling infrastructure i.e. dedicated segregated routes as in Holland.
Really - return of road tax! Thanks, that'll help.
Cue anti-cyclist twitter meltdown.
As mrmo says we need to wait for the finer detail. But as I read it when you **buy a new vehicle you are no longer exempt** for the first year of duty. And any vehicle made after 2017 will fall into one of three bands. Any existing vehicle will continue in the existing band sit looks like.
All this does is ring fence VED for roads and as it will not be enough all other general taxation will continue to be used as well.
Sadly all those drivers out there with single IQ figures will continue to be convinced that their 'road tax' pays for the road. Maybe we can convince them they are paying for the roads twice now.
Edit ** are currently exempt
found the bit in the budget, ALL new cars will be charged at £140 a year except those that are zero emission. (Table 2.5)
and cars listed at over £40,000 will pay an extra £310 a year for the first 5years after registration.
It may be of no surprise but CTRL F on the budget document for the word cycling returned no results....
Plenty of talk about money to spend on roads.
I almost think the "road tax" element is designed to be a distraction. This is what you should be concerned about:
If you buy a small efficient car, you'll be paying £140 more, currently £0. If you buy a great big urban tank, you'll pay £350 less, currently £490.
Almost all vehicles will pay the same £140 rate, this will mean more urban tanks.
First year tax is £2000 on a 'great big urban tank', so only cheaper in the 6th year (maybe).
Will this make driving more expensive, and thus encourage a shift to cycling?
As I read it no, not really, if you buy/PCP/Lease/etc a brand new car, which isn't cheap (but not stupidly expensive either), in my case my £20 a year polo will goto £140 a year (if the BBC numbers are right).
If you are looking at secondhand cars a few years old, who knows??? will they reband existing or continue with the existing rates???
If however you buy some stupidly polluting Range Rover sport then rather than 400 in the first year it looks like you will still be paying £140!
I would wait for the final details, but I am not hopeful!
Only new cars not existing cars.
1st yr will be £2k on a RR Sport. But I can't see that'll stop you buying one if you can afford one in the first place.
No it means that the chancellor hates cyclists and more drivers will feel justified in being tw~ts on the road because they are paying 'road tax'.
There has been a trend lately, that despite the current tide of a modal shift towards cycling, that all authorities seem to be planning towards a big shift back to driving.
TfL's long term plan is an increase in driving over the next 30 years. Oil is currently at its lowest price for quite a while and negotiations with Iran are going 'well'.
Cars isolate and insulate people from each other. With the current trend, expect more divide and rule tactics.
The chancellor must be on drugs....
Well, that looks like a yes.
But at least he's knocked the prossies on the head:
http://usvsth3m.com/wp-content/uploads/2014/12/george-osborne-with-natal...
Knocking prossies on the head is usually what precedes stuffing them in a suitcase and dumping them in the Regents Canal.
Maybe we as cyclists should start displaying VED discs on our bikes, zero value of course based on emissions. Wonder how much that would cost the treasury to administer?
Wouldn't be so quick to assume it will be zero, the BBC are reporting 95% of drivers will pay £140 a year. What proportion of cars are zero emission today???? Suggests that virtually all new cars will be rated the same. Although they also say pegged to emmissions, so f*** knows how that works!!!!
IMO it would make more sense to scrap VED, and just add a few pence on to fuel costs.
Looks like the idea of dissuading drivers from using polluting vehicles has gone out the window. Drive WTF you like, screw the environment!
Divide and conquer.
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