§ Mr. BurnsTo ask the Chancellor of the Exchequer what factors will be taken into account in setting levels of vehicle excise duty; and if he will make a statement.
§ Sir John CopeAs with other taxes, the Chancellor takes account of a wide range of factors in setting the structures and rates of vehicle excise duty (VED). These include the need to raise revenue while minimising economic distortions; the impact of the tax on inflation; the transport costs of British industry and the competitive position of United Kingdom hauliers relative to their continental counterparts; and the costs of other forms of transport. In general the Chancellor will seek to ensure that, through a combination of VED and fuel duty, road users at least cover the economic costs they impose, though further work is required to estimate these costs accurately. When direct charges for motorway use are introduced the Government will take these into account in setting motoring taxes.
Policy in the past has been that road vehicles should, through VED and fuel duty, at least cover their annual "track costs".
However, the Government made clear in their Green Paper, "Paying for Better Motorways", that this measure has limitations as a basis for setting motoring taxes. For example, it takes account only of the cash costs of capital expenditure on road construction, and of current expenditure on road maintenance and makes no allowance for a return on capital. Publication of the annual Road Track Costs Bulletin will therefore be discontinued. The Government intend to produce better measures of the costs of road use including, where these can be valued, wider costs such as noise and other environmental costs.