Today, NFDA attended Campaign for Better Transport’s launch of their latest report, Pay-as-you-drive: the British public’s views on vehicle taxation reform.

Please find documents surrounding the report below:

Many experts and policy-makers agree distance-based road pricing, or pay-as-you-drive, would be required for vehicle taxation to keep pace with the move to net zero. While much has been written about how it could work, it has been a number of years since the public’s views on this have been tested. Based on focus group research and polling of over 3,000 people, Campaign for Better Transport’s report represents the most in-depth recent analysis of public views on road pricing.

Report Key Takeaways:

  • A majority of respondents agree there is a need to reform the current system of vehicle taxation
  • Half support the idea of pay-as-you-drive, while only one in six oppose it
  • Support for the reform increases as people engage with the arguments and options for implementation, showing that initial concerns can be overcome
  • People understand the need for electric vehicles (EVs) to start paying tax like other vehicles (though at a lower rate), as the money lost in fuel duty needs to come from somewhere
  • The ability to budget better as vehicle tax becomes more transparent also appealed to participants.

Report Priorities:

  1. The need to keep up with the transition to zero emission vehicles as the main rationale
  2. A focus on pay-as-you-drive, ‘drive less – pay less’ and helping to tackle the cost of living
  3. Commitment to raise no more than fuel duty and VED do now
  4. Ring-fencing a proportion of the revenue for road maintenance and improved public transport
  5. A tax-free mileage allowance based on postcode with rural drivers receiving more
  6. Suitable mitigations for disabled drivers, sole traders and businesses
  7. An arm’s length body to set and review emission standards and charging rates annually.
  8. EV drivers would start contributing towards taxation like other drivers but at a lower rate to sustain the financial case for switching to EVs
  9. In replacing fuel duty, taxation would be more transparent, and it would present a tax cut to petrol and diesel drivers (by not paying VAT on fuel duty)
  10. People on lower incomes driving older and less fuel-efficient vehicles would pay less per mile
  11. More affluent people driving larger and more polluting vehicles could pay more
  12. Those with no public transport alternatives would pay less, either through a higher tax-free allowance or a lower per-mile rate
  13. Investing revenues in road maintenance would present a direct benefit for drivers and other road users
  14. Investing in public transport would enable car owners to drive less, reducing congestion for all, and support people on low incomes who cannot afford to own a car.

The Three main scheme design options are listed below:

The report suggests a national pay-as-you-drive scheme could progress from a pilot flat per-mile charge for EVs to replacing fuel duty and Vehicle Excise Duty with a smart charge variable by vehicle emissions and where and when the journey takes place. To ensure fairness, the scheme can offer a tax-free mileage allowance, which could be higher for people living in rural areas with fewer alternatives to driving, and the ability to opt out and pay a simple per-mile rate instead for those concerned about vehicle tracking.

Campaign for Better Transport outline how they are now calling on the Government to establish a cross-party commission before the next general election to help broker agreement on the principle that we need to reform vehicle taxation. The commission’s findings should then be consulted upon to decide the preferred way forward so that a pay-as-you-drive scheme is ready for implementation around the middle of the decade.

The NFDA will keep monitoring the situation and report to members about any developments on the topic.