Reforming transport taxes: a fair share package

We worked with Green Alliance to model a series of transport tax reforms that could be implemented between 2025 and 2035.

The ‘fair share’ tax package contains proposals for road pricing, emissions based vehicle purchase taxes and aviation and shipping fuel taxes. These would sit alongside existing transport taxes. This package is designed to be resilient to changes up to 2050 and beyond, minimising the need for further reform in the coming decades.

The proposed reform package includes:

Road transport
– An independent commission to design an equitable road pricing scheme to replace lost fuel duty revenue.
– An emissions based vehicle purchase tax set at 20 per cent on sales of new petrol, diesel and hybrid cars and vans from 2025; and seven per cent on sales of used petrol, diesel and hybrid cars and vans from 2035.
– A national scrappage scheme for the most inefficient vehicles, starting in 2035, alongside the emissions based vehicle purchase tax.

Aviation
– A kerosene tax from 2025 for flights not within the scope of the UK emissions trading scheme, rising to a level consistent with the government’s carbon value by 2035.
– A review into the feasibility of administering a frequent flyer levy, to report by 31 March 2024.

Shipping
– A shipping fuel levy from 2025 on all domestic and international shipping, rising to a level consistent with the government’s carbon value by 2035.
– A mandate for zero emission shipping fuel to reach five per cent of UK fuel blend by 2030.

You can read the report in full here.