Motoring taxes need to triple to cover externalities

From: Local Transport Today : Issue 604 31 Aug 2012

Motoring taxes need to triple to cover externalities, says IPPR

MOTORING TAXES cover at most a third of the costs imposed on society by car travel at, according to an analysis by the Institute for Public Policy Research. The IPPR says that the 5.7p/km motorists pay in fuel duty and VAT only partly accounts for the externalities of car travel, which the think-tank identifies as 15.5p/km, although it adds that even this could be an underestimate. The analysis was conducted for a report that scrutinises and rejects the claim that there is a “war on the motorist”.

The report highlights that the total costs of traffic due to excess delays, accidents, poor air quality, physical inactivity, noise impacts and greenhouse gas emissions are estimated to be £43-56bn a year. Moreover, this does not include “many costs that are difficult to estimate including severance of communities, degradation of landscape and the opportunity cost of land,” it says, urging the Government to update its accounts of the external costs.

Given these external costs, the IPPR urges the Government to “make every effort to avoid further delays in fuel duty increases,” which will cost the exchequer £13.9bn in total over the five years from 2011/12.

The think-tank acknowledges that motoring taxes are high and that fuel duty has increased in real terms by 4% since 2001 if VAT is included. However, it also points out that the proportion of the pump price that is tax has fallen from 75% to 60% in the last ten years and overall motoring costs have fallen by 5% since 1997 if the cost of buying cars, insurance and repair costs are factored in.

The IPPR rejects the AA’s “grossly misleading” claim of earlier this year that an average family spends more on petrol per week (£71.24) than on food (£70), as this assumes above average mileage or significantly below average car fuel efficiency. “Based on typical mileage and car fuel efficiency figures, the average family car requires 13.4 litres per week at a cost of £19,” it says. It also finds that motoring taxes are “broadly progressive,” although with a “higher impact on the poorest 10% of car owners”.

The report also highlights that two-thirds of the poorest ten per cent of households have no car and rely on public transport and bus fares have risen by 69% since 2001, compared to the 5% real terms decrease in motoring costs since 1997. The IPPR calls for the costs of bus travel to be brought down in order to both help these households and to continue to reduce the level of traffic following the recent downward trend.

IPPR finds “little evidence” that public transport programmes are sufficient to reduce traffic levels year-on-year and “considerable scope” for further action, given that every local authority applied for the £1bn Local Sustainable Transport Fund and that only one bid was allowed per area.


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http://www.ippr.org/publication/55/9542/the-war-on-motorists-myth-or-reality