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Plans to offset user costs
Page 10
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CM EXCLUSIVE
• This week's publication of the second progress report of the lorry road-user charge (LRUC) announces the government's intention to reduce the rate of fuel duty from 2006 when the charge is introduced.
The report marks real progress towards the introduction of a fairer and more innovative charge for hauliers, and will ensure that there will be no increase in the tax burden on the UK haulage industry as a whole. We have been working in association with the Road Haulage and Freight Transport Associations, who both welcome this initiative.
Fair share
The charge will ensure that all hauliers, including foreign ones, pay their fair share for using UK roads. It will reflect the true costs that trucks impose, since those trucks which use the roads the most will pay more. It will take into account the differing costs trucks impose on different roads, by having separate rates for motorways and other roads. Ultimately, it will give trucks an incentive through lower rates to travel at less congested times of the day. All this makes the LRUC far more sophisticated than current taxes on the haulage industry. In his 2002 Budget, the Chancellor Gordon Brown confirmed the government's plan to introduce the charge, after consultation with industry, which backed the idea.
Our aim is to strike a balance between tax on the haulage industry and ensuring that all hauliers, regardless of nationality, contribute their fair share towards the overall infrastructure and environmental costs of using the UK's road network.
The key to achieving our objectives is that hauliers will be eligible for cuts in the rate of duty on diesel used in trucks on which they have paid the charge. We have recently secured changes to European legislation to make this possible. Such reductions will be available for all hauliers who buy their fuel in the UK.
A reduced rate of duty on fuel used in LRUC-paying vehicles will mean that the introduction of the charge does not increase the amount of tax that the UK haulage industry has to pay. We are currently looking into how to do this. One way would be to introduce a new marked diesel, available for use in all trucks on which the charge is paid. The other is to allow hauliers to reclaim some of the duty they have paid on their fuel. The government will consider the pros and cons of both Options carefully, bearing in mind the views of all industries concerned.
Eventually, we expect all trucks with a gross-plated weight over 3.5 tonnes to be liable for the charge and eligible for the fuel-duty cut. However, the charge will probably be phased in gradually, starting with heavier trucks.
The charge will vary according to vehicle characteristics: operators of heavier and more polluting vehicles will pay more. Travel on all UK roads will be liable for the charge, and there may eventually be a different rate for driving on motorways.
Differing rates
Finally, we are considering how we could use the charge to encourage HGVs to travel at times of the day when they impose the lowest costs. We may therefore introduce different rates for different times of day from the outset.
To levy the charge, we expect that most trucks using UK roads will have on-board units in their cabs. This might involve satellite positioning technology, as used in the latest fleet management and navigation services, to record how far trucks travel on motorways and on other roads.
It should therefore help to bring the latest technology into the cabs of the UK's trucks, where it can be a valuable aid for the haulage industry, by making other services available. Once the charge has been calculated, the haulage operator will automatically receive regular statements and/or bills. Using technology like this will mean that there is little or no administration for operators to pay their charge. This is known as the 'main scheme'.
It is possible that some operators who rarely use UK roads will not want to install an onboard unit.
Drivers of trucks without one will be able to book their journey, on the internet or at terminals located at service stations and ports, under what is known as the 'occasional user scheme'. They will receive a ticket that allows them to make only the journey that they have paid for.
But there will be no financial benefits from using this scheme over the 'main scheme' and it will be strictly enforced, ensuring foreign hauliers cannot use this as a cost-saving or chargeavoiding measure.
The next task for Customs and Excise is to define the precise requirements for the main scheme, the occasional user scheme and the fuel-duty reductions scheme, and to invite the market to consider how best to deliver them in terms of technology.
The government still expects to introduce the charge around 2006, but this will depend upon how quickly suppliers of the systems can get the technology up and running.
Like the industry, we want the new scheme in place as soon as is feasible, but we do not want to rush a system into place, only to find out that it is inadequate.
We will therefore be talking to suppliers to make sure the right balance is struck between speed of introduction and systems reliability.
More competitive
All in all, we believe that the charge will help the UK haulage industry to become more competitive in Europe, and we look forward to working through the details and options with the industry in order to make it a reality.
El The text of the progress report can be found at: www.hm-treasury.gov.uk/ documents