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The big picture: Pay per mile favours the gas-guzzler

Pay per mile will become a reality if the Government gets its way. It’s set to replace both road and fuel tax, though there’s no guarantee that fuel tax, which with VAT accounts for 75% of the 85p-plus price for a litre of unleaded, will be completely dropped. And there’s little information whether this new tax will be phased to take account of different models, their fuel usage and CO2 emissions, which would encourage people to use greener cars.

Consider this scenario: both fuel and road tax are completely replaced by the pay per mile model. Which carmakers benefit? It appears like a thumbs up for buyers of gas-guzzling cars: the emphasis becomes less on how much fuel they use per mile and more on how many miles they travel per journey (and at which time of day).

The cost of driving, say, from London to Leeds in a 19mpg, 352g/km CO2-emitting Range Rover V8 appears more affordable on the pay per mile model against a 68mpg, 108g/km CO2 Citroën C2 1.4HDi. Both get charged the same £1.34 a mile fee for travelling up the M1 at peak time. The policy benefits the pockets of the wealthy and profligate petrol consumer.

And forget any notion about the so-called trend for downsizing cancelling out the appeal of larger cars. People haven’t really been downsizing at all: cars have been getting bigger. A family can fit as easily into modern B- or C-segment cars as they can traditional D-sector family ones. Cars have been upsizing. That’s why there’s suddenly room for superminis and city cars; sub-segments within segments.

Any change in Government policy should consider all the implications, not just a perceived impact on the environment.

Sceptics suggest that MPs are more interested in raising revenues, anyway. Who really believes that the Government will completely abandon fuel tax? It might consent to a sizeable reduction, but you can bet your gas-guzzling V8 that the net gain from all this will be the Treasury’s.

Especially if those critics who predict a billion-pound shortfall in Chancellor of the Exchequer’s Budget calculations over the next few years are proved right.

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