When I passed my driving test 14 years ago (seriously?!) fuel prices were right around 88p/litre. As a 17-yearold living at home, I had very little outgoings, so a tank of petrol every now and then was not big deal. It made getting to college a whole lot easier and there was never a sense of financial guilt to go with a Sunday drive.
In 2008, driven by the global financial crisis, I can remember gawking as the petrol station price boards ticked over the 100p/litre, followed by a sigh of relief a year later when things seemed to be back to normal.
Only 2009 was a minor correction in is a gradual and continual increase in fuel prices since the early 90’s. The outrage I felt! Over £1 a litre?! Ludicrous!
There was a rather sizeable bump in petrol prices between 2010 and 2015, due in part market conditions, but also green-taxation started to become a thing and no-one really knew what to do with it!
The graph above really starts to get interesting around 2015. Having recovered from the 140p/litre stage, 2015 sawwa return to the trend based on inflation adjusted pricing for petrol. The next year, we saw a dip below this trend. And we are still riding that dip! We are paying less for petrol then would have been predicted 10 years ago… and this needs to change.
Hear me out…
– Step one, increase tax on all fuels that propel a car. That’s petrol, diesel, LPG, hydrogen and yes, even electricity
– Step two, abolish vehicle exercise duty
– Step three, use the additional tax income from the fuel to fill the gap made my losing VED.
If this plan was implemented, several things would start to happen.
Manufacturers would be forced to make their cars more fuel efficient. More fuel efficient means burning less dino-juice, which in turn leads to less emissions. It would also force their hand in to further developing hybrid and electric vehicles.
The current VED taxation system has been so butchered and adapted over the years that you end up in the crazy situation where the simple act of owning some (admittedly rather expensive) cars costs you £2000 per year. The issue resides in the fact that the tax bands are based on a distance (“grams per kilometer”), but you are taxed based on a timeframe (i.e. annually).
By moving the system to one solely based on fuel taxation, an Aston Martin V12 Vantage S that does a handful of miles per year is taxed for those miles (and for having a big, thirsty V12) in the amount of fuel it burns. It isn’t taxed at a rate of £5.48 a day simply by being in someone’s garage. On the flip side, cars which are racking up tens of thousands of miles and producing considerably more emissions in to the process are forced to pay more tax due to the additional fuel they are using. Suddenly you think again about those shorter journeys.
All of this ties back to what VED is supposed to be. It is the fee you pay for the privilege to drive on the public road. It isn’t and shouldn’t be a tuning knob for hitting emissions targets. It is there to pay for repairs to the UK’s road network, and to be invested in to it’s future.
Which brings me on to the final point. The future. It seems likely in the short-term that electrification is going to win out. It will likely be another few decades before electric is the status quo, but fossil fuels will be phased out. Currently, any electric vehicles costing under £40,000 new on the UK road pays nothing in VED. An incentive put in place to encourage people to buy the cars a few years ago means that despite causing as much wear and tear on the road network as any other car, and despite needing significant investment in the infrastructure to keep them going, electric cars are not contributing nearly as much as petrol or diesel ones to the future.
So there you have it. Making fuel more expensive would be a fairer system for all road users and incentivise manufacturers, and make people think twice about those short journeys. Have I convinced you? Do you want to pay more for fuel? Answer below.
Also published to Drivetribe.