The UK will need to undertake a major overhaul of road taxes, including the introduction of widespread road tolls, as more drivers turn to eco-friendly cars, according to a new report.

The report from the Institute for Fiscal Studies (IFS) funded by the RAC Foundation points to a shortfall of £13 billion a year in tax revenues by 2029 as motorists pay less in fuel and excise duties on lower emission and more efficient vehicles.

“The irony is that while ministers encourage us to buy greener, leaner cars, they are being forced to look at ways of clawing back the money motorists think they will be saving,” says RAC Foundation director Stephen Glaister.

Currently, fuel and excise duties on vehicles raise around £38 billion a year but the Treasury is predicting a substantial decrease over the coming decades as cars become more fuel efficient and electrified.

The present system of road tax and fuel levies cannot be varied according to time or location, so cannot tackle issues like congestion.

Widespread tolls or ‘road pricing’ should serve to reduce congestion, says the report, and leave many – particularly rural drivers – better off.

The alternative to charging drivers by the mile for road use in congested areas at peak times could be a 50% rise in fuel duty.

For further information:
www.ifs.org.uk/

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Article source: http://www.energyefficiencynews.com/i/5105/