Pothole-fixing, fuel duty-scrapping car tax scheme wins economics prize

Pay-per-mile scheme proposes to scrap fuel duty and vehicle excise duty, and instead charge motorists per mile. An extra £2.3 million per day could be raised through the scheme

The prestigious Wolfson Economics Prize has been awarded to a scheme that calls for the introduction of a per-mile car tax in place of fuel duty and vehicle excise duty.

UCL politics and urban planning graduate Gergely Raccuja suggests in his submission, titled “Paying for road use could be miles better”, that insurers collect drivers’ road bill at the same time as their insurance premiums, reducing administration costs.

Raccuja also claims that the scheme would be more representative of drivers’ usage of the roads, and would be fairer to lower-mileage car owners. Lighter and cleaner cars would be charged less than heavier, dirtier cars, but no numbers have been put to the proposal yet.

The scheme would charge drivers a fee per mile after the first 3000 free miles, which would raise £2.3m per day for the treasury, in place of the increasingly meagre fuel duty revenue. Fuel duty and vehicle excise duty would be scrapped to make way for it, and the extra money generated could then be put into fixing the UK’s pothole-scarred roads. Raccuja says that Britain could be pothole free within half a decade under the scheme.

Raccuja was awarded the prize – which includes £250,000 – by a panel of judges comprising former chancellor Lord Darling, Legal & General chairman Sir John Kingman, economist Bridget Rosewell, former deputy Mayor of London for transport Isabel Dedring and The Times associate editor Lord Finkelstein.

The idea also benefited from tweaks made by the RAC Foundation, the RAC’s motoring research arm.

The Government’s latest vehicle excise duty changes have come under fire, with critics claiming that the rules are not representative of the UK’s car industry and unfairly penalise more expensive, but less emissions-heavy, cars such as the Mitsubishi Outlander PHEV. Mitsubishi CEO Lance Bradley was particularly outspoken about the changes.

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