RAC Cars News


Car Tax Expenditure Causes Concern

By raccars Published

Image Source

A new report by the RAC Foundation has revealed that only a quarter of the revenue raised by vehicle taxation is spent on the UK's roads network. In 2012, the government raised £30.7 billion from motoring taxes, of which only £7.5 billion was spent on roads.

Of that £30.7 billion, £5.9 billion came from Vehicle Excise Duty and £24.8 billion came from fuel duty. Only 24% of that was spent on roads: £4.5 billion on local road networks and £3 billion on national roads. That's less than the previous year - in 2011, £30.9 billion was raised directly through motoring taxation and only £7.9 billion was invested into road network maintenance.

In fact, the average expenditure of motoring taxation revenue on road networks from 2008-2012 was only 28%. The RAC report found that the gap between road taxation income and expenditure has widened dramatically during George Osborne's tenure as Chancellor of the Exchequer. While roads maintenance expenditure has dropped, the condition of the UK's roads has deteriorated, with local councils warning that they will have to re-allocate money committed to social and environmental services, to deal with the huge pothole backlog.

Motoring taxation, both from VED and fuel duty, ends up in one central fund along with all other taxes. This means the money raised from road taxes can end up paying for education, healthcare or any other national expenditure.

The Treasury has commented that the 2014 Budget saw the announcement of a Pothole Fund of £200 million, to allow local authorities to repair up to 3.2 million potholes nationwide. This was part of a larger project that has seen the government commit at least £24 billion to maintain and upgrade Britain's road network over a decade, from 2010-2021. This is the largest investment into British roads for more than thirty years.

Twenty years ago, £17.6 billion was raised through fuel duty and VED, £6.3 billion of which was spent on roads. Ten years later in 2003-2004, fuel duty and VED income had risen to £26.5 billion, but only a little bit more, £6.9 billion, of that went towards roads. 2009/2010 saw the biggest single year of roads expenditure at £9.7 billion, almost a third of the £29.5 billion raised through direct motoring taxation that year. Since then, the percentage of motoring taxation revenue spent on roads has dropped annually, while income has remained relatively stable.

Looking to Buy?
Search for cars