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Fuel tax will be replaced by road pricing providing new possibilities to manage traffic

Updated: Jul 4, 2022

More and more governments are considering some form of general road pricing to compensate for the decreasing income from fuel and vehicle taxes. With to more efficient vehicles with combustion engines and due to the emergence of EVs, income from motoring taxes is declining globally.

Several states in the US are therefore working on RUC programmes replacing fuel tax: Utah for example has such a scheme in place already. It is not (yet) replacing the existing fuel tax but is offering to owners of electric and hybrid vehicles the option to pay an alternative fuel vehicle fee on a pay by the mile basis. By running this scheme Utah is getting prepared for a more widespread rollout of road user charging to all registered vehicles which is planned for end of 2031 according to a report published by the Utah Department of Transportation (UDoT).

Some countries in Europe are also starting to consider replacing today’s motoring taxation by road user charging as more and more drivers transition from petrol and diesel powered vehicles to greener alternatives. Just a few days ago, a cross-party transport committee in the UK came to the conclusion that there is no other option but to replace fuel tax with road pricing. Not replacing existing motoring taxes with an alternative road charging scheme would lead to either decreased investment in public services, including road maintenance, or increased Government borrowing. For more details see this article.

Besides compensating for declining fuel and vehicle taxes, road pricing would provide new ways of managing traffic. As those schemes will likely make use of state-of-the-art telematic technology, so drivers could be charged based on distance driven factoring in air quality and congestion in real time. By applying respective tariff schemes, road users could be incentiviszed to take certain routes, avoid specific zones, start their trip in off- peak hours or shifting mode. London for example is considering the introduction of such a “smart congestion charge” replacing their existing congestion charging and low emission schemes.

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