A new report by the Green Alliance outlines how a ‘fair share’ package of tax reform could move the UK closer to net zero, secure revenues for the Treasury, and works progressively across the income distribution.
The study, called Reforming transport taxes: a fair share package, looked at a range of road, aviation and shipping taxes, and their impacts on emissions, revenues and household budgets.
Following that analysis, it concluded that a ‘fair share’ package would encompass road pricing, emissions-based vehicle purchase taxes, a kerosene tax and a levy of shipping fuel.
According to the Green Alliance’s modelling, a package of these measures would raise an additional £37bn in 2035 into government coffers, on top of a projected £60 billion which would be raised from current transport taxes at 2022 prices.
The group said this would give the government the option to either reduce taxes elsewhere or to increase public spending.
Additionally, the package would have “a big impact on the UK’s annual greenhouse gas emissions”, potentially cutting them by an average of 10.6 million tonnes of carbon dioxide a year between 2025 and 2035 – equivalent to half of all greenhouse gas emissions each year in Northern Ireland.
Speaking about the report, policy advisers Johann Beckford and political adviser Alice Watson at Green Alliance, said: “While taxes on polluting travel, from driving to flying, would go up, our reforms would be more progressive than the current system. It would mean richer households paying proportionally more than poorer households, with the charges phased in between 2025 and 2035 to allow people to adjust.
“As a society, we agree tax should be part of the cost of driving. After all, it causes carbon emissions, air pollution, noise, depletes natural resources, congestion and is dangerous to pedestrians and cyclists. Then again, it can facilitate vital cultural, economic and social exchanges that we all value.
“But, when it comes to other polluting transport sectors like aviation and shipping, our tax system is not even close to accounting for the factors (the negative externalities) which determine the costs we should place on them.”
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