The Transport Select Committee found that the loss of fuel duty from full electrification would need to be replaced by either a 5% rise in the base rate of income tax, or something else. Given that:
1) 5% on the base rate of income tax (in effect already 20% + 13.8%) is a big increase and that the 1.5%/3% increase in the national insurance component is already going to substantially increase the wage tax burden on many people so this may not be politically tractable.
2) If you wanted to recover it from higher rate tax payers, it would be a massive increase, a lot more than 5% this is probably also not feasible. (There are 27m basic rate taxpayers out of 32m taxpayers and only 4.1m higher rate taxpayers).
3) VAT ditto would have a catastrophic effect on the cost of basic goods, even more regressive than the NI increase.
4) People are already used to paying this money as part of owning a car so no "sticker shock"
The Select Committee therefore found that some kind of road pricing was the almost inevitable way of replaying fuel duty.
They did not say that this would require full tracking telematics, there are broadly a few different ways of doing this:
1) By far the simplest and most privacy preserving is a simple mileage counter with a flat rate. This means no data needs to leave the car.
2) A zoning / timing system operating on the car itself. This would allow simple congestion charging based on location and time of use without data leaving the car.
3) Fully dynamic charging system, this requires a central database tracking all movement.
I think a lot of transport economists would love 3 because they could make driving costs almost fully reflective of transport infrastructure costs - arguably someone who drives a light vehicle only at 3am imposes almost no load on the system while someone driving the same car, the same distance during the morning rush imposes a lot. It also allows the existing congestion charging infrastructure to be removed in London and the other places that are putting it in.
However people generally do not like this idea so I am almost sure that we will end up with either (1), (2), or those with an elective (3) that allows savings for people willing to disclose the data.
The Transport Select Committee found that the loss of fuel duty from full electrification would need to be replaced by either a 5% rise in the base rate of income tax, or something else. Given that:
1) 5% on the base rate of income tax (in effect already 20% + 13.8%) is a big increase and that the 1.5%/3% increase in the national insurance component is already going to substantially increase the wage tax burden on many people so this may not be politically tractable.
2) If you wanted to recover it from higher rate tax payers, it would be a massive increase, a lot more than 5% this is probably also not feasible. (There are 27m basic rate taxpayers out of 32m taxpayers and only 4.1m higher rate taxpayers).
3) VAT ditto would have a catastrophic effect on the cost of basic goods, even more regressive than the NI increase.
4) People are already used to paying this money as part of owning a car so no "sticker shock"
The Select Committee therefore found that some kind of road pricing was the almost inevitable way of replaying fuel duty.
They did not say that this would require full tracking telematics, there are broadly a few different ways of doing this:
1) By far the simplest and most privacy preserving is a simple mileage counter with a flat rate. This means no data needs to leave the car.
2) A zoning / timing system operating on the car itself. This would allow simple congestion charging based on location and time of use without data leaving the car.
3) Fully dynamic charging system, this requires a central database tracking all movement.
I think a lot of transport economists would love 3 because they could make driving costs almost fully reflective of transport infrastructure costs - arguably someone who drives a light vehicle only at 3am imposes almost no load on the system while someone driving the same car, the same distance during the morning rush imposes a lot. It also allows the existing congestion charging infrastructure to be removed in London and the other places that are putting it in.
However people generally do not like this idea so I am almost sure that we will end up with either (1), (2), or those with an elective (3) that allows savings for people willing to disclose the data.