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Road costs review set to raise duties

3rd March 1994, Page 4
3rd March 1994
Page 4
Page 4, 3rd March 1994 — Road costs review set to raise duties
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Which of the following most accurately describes the problem?

by Nicky Clarke

• Hauliers face massive future vehicle excise and fuel duty rises as a Treasury push to increase revenue from Government departments looks set to change the way LGV operators are charged for their road use.

The Department of Transport is scrapping its current regime of costing roads— based on the cash costs of maintenance and new roads—which makes no allowance for a return on capital.

Instead a DOT/Treasury review starts this week to study how "wider costs such as noise and other environmental costs" can be included in road track costs. It may consult the industry on how these costs could be taken into consideration.

The review is looking at introducing the "capital costing method" which includes an annual depreciation charge and a required rate of return on capital. The roads network is the UK's biggest public asset.

In his Budget speech last year, Chancellor Kenneth Clarke said Government departments would move to resource accounting to identify "the full cost of resources". Sir John Cope, the treasury minister responsible for indirect taxation, said in the House of Commons last month: "the Chancellor will seek to ensure that through a combination of VED and fuel duty, road users at least cover the economic costs they impose, though further work is required to estimate these costs accurately". But following Government plans to introduce road pricing, it is thought this accounting method is too limited.

The British Roads Federation sees the change to include other costs as an excuse to increase tax on road users. "The Treasury is trying to create an intellectual justification for increasing goods vehicle taxation," says assistant director Paul Everitt.

Road freight competitor Rail freight Distribution could be at most risk as it has paid some of the lowest track costs. But the 12 million tonnes a year ii carries is safe for at least 12 months because RfD has fixed its prices with customers. Raittrack denies it is increasing track charges.

But the DOT says "there is no presumption that road tax or fuel duty will rise" as a result of the new way road track costs are calculated. In spite of this, its document "Paying for Better Motorways", which looks at motorway tolling, says capital costing "typically gives a higher annual charge than cash costing".

LGVs already cover their road costs by more than a fifth. This financial year the sector will raise £2.34bn compared to its road use cost of £1.93bn.


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