Monday, June 07, 2010

Time for incentives on road tax too?

The "big" news this morning appears to be the planned scrapping of pay as you throw bin taxes, in favour of a more incentive driven approach that rewards people for recycling. Now, I've always been a rather big fan of a pleasure over pain Benthamite approach to environment policy and beyond, so such a move is welcome, but how about applying it further?

One area we could take the incentive approach is on "vehicle excise duty", more commonly called "road tax", the basis of which is currently an unfair arbitrary assumption about carbon emissions of a given car and completely ignore the usage of the car. Think of it like this. Currently, all owners of a 1.6L Ford Mondeo pay exactly the same road tax every year, yet the amount each person uses their car will vary wildly.

Every year, when you get an MOT, your mileage is recorded and the details of that MOT certificate submitted to a central database so that when cross-referenced with insurance, road tax can be issued. So, how about offering incentives, in the form of some sort of discount, based upon annual mileage as well?

Many people own cars with high road tax, but do minimal mileage, which means, perversely, their being punished on the basis of the arbitrary emissions of their car, whilst in fact they may be producing less emissions than someone with another small car who is paying less road tax for having that smaller car.

If you want to make people drive less, make it pay for them to do so, by factoring in their usage into their road tax cost. It's not rocket science now is it?

UPDATE: A number of people in the comments have said this already exists with fuel tax. That's not strictly true though. Fuel tax is a tax, I'm talking about incentives. If you need to drive somewhere you do it, and you pay for fuel with little choice. This is about adding an incentive to people by offering a discount or at least acknowledging that they're driving less in an area of tax where it is easiest to do so.

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