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UK must face up to falling road emissions to avoid £23bn tax gap

June 26, 2017

By Paul Homewood

 

h/t Green Sand

 

The Telegraph has finally woken up to a problem I was warning about four years ago!

 

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The UK Government risks sleepwalking into a £23bn tax black hole by failing to face up to the fiscal impact of tackling road transport emissions.

The new parliament plans to put legislation in place to upgrade the UK’s infrastructure to help increase the number of autonomous and electric vehicles on British roads. But a new report from right-leaning think tank Policy Exchange has warned that the Treasury could find a gap in its expected tax revenue unless the shift to cleaner vehicles is part of an overarching Government strategy.

 

electric vehicle

“The Government needs to recognise the fiscal implications of cleaning up road transport. Our analysis suggests that if carbon targets are met, fuel duty receipts could be £9bn-£23bn lower in 2030 than the Government is currently assuming,” said Richard Howard, an author on the Policy Exchange report.

The Office for Budgetary Responsibility (OBR) has estimated that fuel duty receipts could increase from £28bn a year to around £40bn by 2030.

But Policy Exchange said fuel duty tax receipts would be as low as £17bn-£31bn by the end of the next decade – or £9bn-£23bn lower than the OBR is banking on – if the legislated carbon targets are met. Mr Howard said the OBR and Department for Transport are working off completely different projections for emissions than the Committee on Climate Change.

http://www.telegraph.co.uk/business/2017/06/25/uk-must-face-falling-road-emissionsto-avoid-23bn-tax-gap/

 

It is significant that they highlight the discrepancy between the OBR and CCC assumptions.

In my view, the CCC are living in cloud cuckoo land if they really think that millions of drivers are going to be driving electric cars in ten years time. There is simply nothing that electric cars can currently offer that will attract more than a handful of eco loons, and it is hard to see that changing in such a short space of time.

And although the government talks the talk, as far as CO2 emissions go, they are hardly likely to walk the walk when they stand to lose tens of billions in tax revenue.

But just assuming the CCC are right, where will the government make good the lost tax revenue?

Taxing electric cars? If they do, nobody will buy them.

Taxing electricity? A non starter.

Raising other taxes? A guaranteed vote loser.

Road tolls? Again, this would be massively unpopular.

 

I expect the government will still be kicking the can down the road ten years from now.

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24 Comments
  1. Dung permalink
    June 26, 2017 9:55 pm

    They will find a way to destroy our economy, they have experts.
    I do not believe that people will buy electric cars this side of WW3 but that will not stop them throwing our money at it.

    • June 27, 2017 4:04 pm

      I could wish I didn’t agree with you, Dung, but …

      I don’t think in my lifetime I have experienced government quite so excessively incompetent as in the last 25 years. The Blair Era (whether you lay the blame at his door or not — I do) will surely go down in history as an age of pointless, virtue signalling, egotistical, vanity projects, each one more bizarre and unnecessary than the one before it.

      And every one, apparently, carefully designed to impoverish the ordinary people while not even having the marginal, debatable benefit of doing anything worthwhile to enrich its supporters.

      Nobody stands to benefit from HS2. Nobody stands to benefit from Hinkley Point. Nobody stands to benefit from electric cars. Those who do benefit will simply be those who would in any event have done so from national expenditure on transport or energy infrastructure or whatever a government more attached to reality would have elected to spend taxpayers’ money on.

      Every one of these projects is sucking money out of consumers’ pockets; none is needed; nine is wanted. And I would venture to suggest that none will succeed. We are all of a sudden in the business of deliberately breeding white elephants.

  2. June 26, 2017 11:17 pm

    And that sums up the fallacy of “green” taxation; tax us until we stop using oil, and then tax us because we stopped using oil. we have seen this already with Road Tax; too many people started driving small economical, low CO2, zero road tax, diesels and Road Tax income dipped. So Road Tax was raised.

  3. markl permalink
    June 27, 2017 12:41 am

    Road tax is the tip of the iceberg. Wait until they discover the network of businesses that bring fuel to the curb side pump. No more tax receipts from them. Oil/fuel import taxes? Gone. Gas stations will morph into kiosks/islands with electrical connections and payment machines and you’ll need MANY more to service an all EV customer because the time to ‘refill’ is more often and the ‘refill’ takes longer. Expect lines/queues. Mechanics will be fewer and devoid of ICE experience (+/- situation 🙂 ). Flat tire and no spare because of the movement towards run flats? Too bad, find an available tire service. I’m not anti EV in fact I support the concept in high density environments. Quieter, smoother, quicker, But unfortunately in high density environments the advantage of charging overnight while at home is questionable for most people.

    • It doesn't add up... permalink
      June 28, 2017 7:11 pm

      There are no taxes on oil and fuel imports. Only the duty and VAT that we pay at the pump. That’s about 60ppl in duty and 20 ppl in VAT at the moment. Tax enough!

      • markl permalink
        June 30, 2017 3:32 pm

        “…There are no taxes on oil and fuel imports….” None? I doubt that. You mean that you know of. Shipping or import duties don’t exist in your country? Dock fees? Corporate business taxes for the oil companies?

  4. John F. Hultquist permalink
    June 27, 2017 3:39 am

    Such issues are being studied. In Washington State there is research made possible through a $3.8 million grant from the Federal Highway Administration.
    http://www.spokesman.com/stories/2016/dec/26/state-undertakes-pilot-study-to-replace-gas-tax-wi/

    The State’s web site for this is here: https://waroadusagecharge.org/

  5. Stonyground permalink
    June 27, 2017 6:58 am

    I don’t think that we really need to worry about any of this because electric cars are just never going to be more than a tiny niche in overall road transport. You only have to think about it for a few seconds to see that the electric car utopia is nothing but a stupid green daydream. Since our electricity generating capacity is being cut to the bone in the pathetic belief that windmills and solar panels can actually generate sufficient quantities of reliable power, where is the electricity going to come from to charge all these batteries?

    • June 27, 2017 8:05 am

      Exactly, and if the idea is to recharge at home overnight that totally eliminates solar power from the equation.

      • Ben Vorlich permalink
        June 27, 2017 3:59 pm

        Not necessarily, purchase a 50kWh battery, enough for a Nissan Leaf with some to spare if the following day is cloudy. Charge that up during the day from solar then charge the car overnight from the battery. People are buying backup battery chargers for mobile phones so the sell shouldn’t be too difficult.

        What you do in winter in northern Europe I don’t know.

    • dave permalink
      June 27, 2017 8:11 am

      “…green daydream…”

      You mean “wetdream.”

  6. June 27, 2017 8:01 am

    Road tolls won’t work because electric cars have too short a range to go anywhere worth charging for.

    • It doesn't add up... permalink
      June 28, 2017 7:14 pm

      The London congestion charge must look pretty expensive on a per mile basis. Expect parking to be horrendous too.

  7. Europeanonion permalink
    June 27, 2017 8:54 am

    The roads are generally in bad shape. It may be that accidents will have a third representative in the dock, the local councils who can justly be blamed for drivers having to take their eyes off the road because they are faced with road surfaces and the proliferation of signage that make careful driving virtually impossible.

    Ulster is not a special case in receiving a large monetary settlement. The State, in its many guises has been pandering to blocks of voters in many ways. Instead of facing down those that peddle misinformation and altered realities we see wholesale embracing of voting blocs that have now come to haunt the political scene. When charlatanism and non-fact can rule then any statement on virtually any topic you care to name can, with the correct emotional modulation, be the truth, as we see proven today.

    It is the fog of war. It is the damnation of progress when a proof can be sought that is no more real or understandable than that of turning base metals into gold. If Newton could fall for it then we should not consider ourselves beyond being gulled too. Where Gene Roddenberry might be said to be the father of the mobile ‘phone with his creation of the hand held communication device the visionaries that fall back on windmills, that are willing to scar our coastlines and disrupt nature while suggesting that they are at one with it are people that should be sectioned, avoided.

    In a period of but a few generations at the turn of the 19th century man broke free of the shackles of nature that had bound us in uncertainty and put himself into a position to ponder even the exploration of the rest of our environment, the universe. From a time when he would have been tied to his village and controlled by fear in religion to when any dream, such as Roddenberry’s, could be achieved, man is better, freer for his accomplishment in adventure.

    We are now in a position to view our great step forward as being some sort of tragedy that only ruined our environment and subjugated our people Tell that to the billions of people that indulged in travel, education, discovery, security, luxury, abundance on the back of those now derided inventions using materials which were but structure and waste made by ingenuity to have a function. We are in a place of chaos where no certainty pertains. The unscrupulous gerrymandering for votes on the back of insubstantial science and the deployment of exception puts power into the hands of the undeserving and can only result in mayhem.

    • A C Osborn permalink
      June 27, 2017 10:56 am

      I think the forerunner of the current Mobile Phone is not Gene, but Chester Gould who wrote the Dick Tracy Comic Strip series starting in 1931.
      He had a 2 way Wrist Radio.

  8. Max Sawyer permalink
    June 27, 2017 10:27 am

    Governments never forgo tax. Any loss from petrol/diesel vehicles will be made up elsewhere, starting small to reel the suckers in and keep public complaints to a minimum, and then and going big – so we can expect a combination of taxes on electric vehicles, road tolls, a levy on electricity, battery disposal tax and anything else they can think up (remember air passenger duty – utterly pointless, other than as a revenue-raiser).

    • Gerry, England permalink
      June 27, 2017 12:45 pm

      Insurance tax? See how that has been successively abused since its introduction. And what is it? A tax on good sense and prudence in many cases and a legal requirement in the case motor insurance.

  9. Tim Hammond permalink
    June 27, 2017 10:28 am

    If the taxes are there to pay for externalities, then when the loss doesn’t matter – the costs go away, so we don’t the taxes to pay for the costs.

    After all, all those tens of thousands dying from PMs and Nox will now be fit and healthy and producing/consuming. So we can cut the NHS budget by the amount we are told cars cost us each year.

    • Gerry, England permalink
      June 27, 2017 12:47 pm

      The same logic for the sin taxes I presume which is currently relevant with Aviva’s dumb virtue signaling of selling tobacco shares. If they have enough to sell then a good time to invest in some more tobacco shares given how well they perform.

    • June 27, 2017 9:30 pm

      Or more likely being paid pensions, social care etc!

  10. 2hmp permalink
    June 27, 2017 3:47 pm

    Just work out the number of charging points needed away from homes. It will need over 50,000 more service stations

  11. tom0mason permalink
    June 27, 2017 4:55 pm

    And Europe has other problems with emissions on the road —
    https://www.infowars.com/migrant-footage-from-france-literally-looks-like-its-out-of-a-horror-movie/

    And that will never be reported by the BBC or other parts of fakeNews MSM.

    • markl permalink
      June 27, 2017 5:55 pm

      So where is the line between migrant and invader and who will speak for those being invaded? Certainly not the MSM in Europe as they totally ignore anything negative about the situation and smear anyone who even remotely questions the status quo.

  12. Green Sand permalink
    June 29, 2017 10:18 am

    Dear Jillian again! Ably abetted by Lord Deben and his “The Committee on Climate Change (CCC),” which she claims is “an independent advisory body,” plus “Richard Black, of the Energy and Climate Intelligence Unit”!

    “Accelerate electric vehicle targets to more than half of new car sales, urges new report ”

    “….set a target that electric vehicles should make up at least 60pc of new cars and vans sold in the UK by the end of the next decade…..”

    As we can’t build any base load power stations I foresee a lot of days with no cars on the roiad! But wait maybe interconnectors, mirrors, wind mills and unicorn farts can save the day?

    http://www.telegraph.co.uk/business/2017/06/28/accelerate-electric-vehicle-targets-half-new-car-sales-urges/

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