Climate change is a taxing question

The growth in electric vehicle use will be a boon to the climate, but a challenge to the Treasury, says Gavin Reddin

Gavin Reddin
19 October 2021
Gavin Reddin
Gavin Reddin

 

We are all hold our breathes in the hope that governments gathering at the COP26 climate change conference in Glasgow can come up with an agreement to reduce carbon emissions with the plan of limiting calamitous temperature rises.

We in parking industry can hardly not be aware of our special responsibilities in this debate.

We currently work as part of the problem not the solution. With traffic widely held to be responsible for 15% of CO2 released into the atmosphere, we need to be mindful that all the energy and innovation that our component parts generate should in large part go towards ameliorating the damage we do now and have done in the past.

We need to encourage the adoption of electric vehicles and  provision of EV charging. We should be arguing for integrated transport policies that encourage public transport, cycling and walking.

Smart cities and neighbourhood traffic schemes, as seen in the concept of the 15-minute city championed by Mayor of Paris Anne Hidalgo, provide some hope and certainly work for the industry.

But the elephant in the room is how governments will fund innovation and change in the period when we move to carbon-free economies.

Electric cars will have an increasing impact by providing incentives through lower taxation and road charging for those vehicles that move away from petrol and diesel.

The newly created emissions charging zones seen in Bath and Birmingham, soon to be followed by Manchester, will also have the effect of raising revenues and reducing pollution. But the financial impact of such schemes is localised and could be short lived unless more happens at a national level.

On that score, we will soon be racing towards 2030 and the end of new diesel and petrol vehicles.

The reduction in petrol and diesel consumption that will accompany an uptick in EV use means that, in the medium and long-term, the treasuries of governments are set to see a massive decline in tax revenues from the area of society that has created the most problems in the past – fossil-fuel burning vehicles.

The reduced taxes and cheaper costs of running an electric car will according to Tony Blair’s Institute for Global Change reduce the cost of owing and running a car by 71% reducing the governments tax take from motoring by £30bn by 2024 or 50 NHS hospitals!

Using the old classic adage of free market economics of ‘let the polluter pay’, it seems a strange policy that will reward past misdemeanours with financial gain and once the electric revolution has been allowed to take hold its likely that new ways will have to be found to make the car and lorry owner plug the gap in the public purse to avoid and wider and unfair distribution of the tax burden.

The answer, whilst unpalatable for some, rests with a comprehensive road charging system. The technology allows us to do this now without the need for toll booths or barriers and also allows for differential charging for, say, care workers who can pay substantially less than business travellers.

It would also help tackle the appalling and wasteful congestion found in many of our cities and of course have the added benefit of supporting innovative and socially responsible companies within our industry as they come up with the technical solutions and the services required to operate the schemes. A comprehensive system of charging drivers to use their cars (electric or otherwise) may be the answer. In short, it’s time for our industry to pay up and right past wrongs.

Gavin Reddin is managing director of Parking and Secure Documents

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