Cutting road transport emissions could cost billions more in lost taxes than the government thinks

Courtney Goldsmith
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The government needs a joined-up strategy (Source: Getty)

The government has failed to take full account of the fiscal implications of cleaning up road transport, according to a new report.

Cutting road transport emissions to the legalised carbon targets would leave a £9-23bn hole in fuel duty tax receipts, think tank Policy Exchange argues in a report published today.

The Office for Budgetary Responsibility (OBR) has suggested fuel duty receipts could increase from the current £28bn per year to reach around £40bn by 2030. However, Policy Exchange analysis suggested that to meet lower carbon targets, fuel duty tax receipts would be £17-31bn in 2030.

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The cumulative impact on fuel duty receipts could be as much as £170bn between now and 2030.

The report found the OBR and the Department for Transport (DfT) are working off completely different projections for road transport emissions than the Committee on Climate Change.

Policy Exchange said the government needs to create a joined-up strategy to clean up road transport.

The report, Driving Down Emissions, found there is no overarching strategy to deliver the required reductions in vehicle emissions, and it is unclear who is in charge across the government.

"Given that the Queen’s speech commits the government to improving infrastructure to support autonomous and electric vehicles, this strategy is urgently needed," Policy Exchange said.

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