Time to ditch the car sin taxes and pay as you drive
This article by Alison Payne first appeared in The Times on 11 February 2022
So-called “sin taxes” are, by design, primarily intended to change behaviour. The revenue generated is of course welcome, but if sin taxes are truly successful they will divert people away from certain activities and, as a result, revenue generated will decline. Vehicle excise duty (VED) and fuel duty are two examples of sin taxes, designed to encourage us to use our cars less, or to switch to more environmentally friendly vehicles — neither tax is applied to electric cars.
Last year these taxes raised more than £2 billion in Scotland. But the phasing out of the sale of new petrol and diesel cars means these taxes are on borrowed time. The current system also takes no account of access to public transport — many living in remote areas or working unsociable hours have no alternative to the car. Electric vehicle owners still add to congestion and take up road space but do not currently pay any car tax.
As a result, a new tax system for charging for road space is required. Reform Scotland has been arguing that a pay-as-you-drive system of road pricing should replace VED and fuel duty, and last week our views were echoed by the transport select committee at Westminster.
Road taxes are currently reserved to Westminster but there is an opportunity for the UK and Scottish governments to work together to develop a pilot scheme. In Singapore the government tested prototype systems and gathered feedback. Similar groundwork could and should be trialled in Scotland.
All of Scotland’s roads would be covered by road pricing but the cost of using each road would depend on a number of factors, including the time of day and congestion levels. This means that many quieter roads, particularly in rural areas, would have no charge at all. Local authorities could work with Transport Scotland to consider the charging levels appropriate for the circumstances in their areas. We cannot wait any longer to start seriously considering how we pay for road space in the future.