Motor Vehicles: Taxation
The question
To ask the Chancellor of the Exchequer, what estimate she has made of the proportion of (a) fuel duty, (b) VAT on fuel, and (c) other motoring taxes that is attributable (i) directly and (ii) indirectly to net zero-related policies.
Answered by Dan Tomlinson
Motoring taxes and VAT are primarily intended to raise revenue, which helps to fund vital public services and infrastructure, including investment in roads and transport.
However, some fuel and motoring taxes have secondary objectives or environmental effects, such Vehicle Excise Duty (VED), where different rates apply to cars, vans, and motorcycles, and the rate for each vehicle is calculated according to a range of factors, such as its date of first registration, weight, or CO2 emissions. The government considers the environmental impacts, including emissions, when making changes motoring taxes. More broadly, the government keeps motoring taxes under review as part of its approach to supporting the transition to net zero while maintaining a stable tax base and annually reviews the rates and thresholds of taxes and reliefs to ensure that they are appropriate.
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