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Freight Taxes - What The Government has said
22 November 2002

Industry needs a fair and efficient way of taxing road freight transport. UK lorry operators currently face the highest levels of freight taxes anywhere in Europe. As a result UK hauliers operating costs are between 5% and 10% higher than our competitors, in an industry when margins average just 3%. The Chancellor has promised to address these issues. This paper shows why he should put his words into action.

Fuel Duty

"Given the high and volatile oil price I have decided to freeze fuel duties this year" Gordon Brown, Budget Statement 2002

• Since November 2000, world oil prices have roller coasted. Having fallen from $30 per barrel to $16 per barrel by November 2001, oil prices are currently back up to $30 per barrel as the markets respond to prospect of military action against Iraq.
• Despite a cut in diesel duty of 3 pence per litre (ppl) in the March 2001 Budget, UK diesel prices are more than double those in continental Europe.
• Higher diesel duty adds £15,000 extra to the fuel bill for a 40t gtw artic compared to a French operator.

Lorry VED

"The road haulage industry will benefit from steep reductions in Vehicle Excise Duty to among the lowest in Europe." Labour's Manifesto 2001

• The Government introduced a reformed structure for lorry VED from 1 December 2001. This halves VED rates for many categories of lorry.
• Lorry VED for a 40t gtw artic (without the £500 clean emissions reduction) will be £1,850. This is still higher than 12 out of the other 14 EU member states.

Van VED

“VED for vans meeting the challenging euro-IV emissions standard will be reduced to £105 from March 2003.” Budget Statement 2002

• Diesel engined vans, which make up 95 per cent of all vans sold, cannot achieve Euro-IV emission standards in a way that makes commercial sense. Vehicles would need to be fitted with a particulate trap costing £1,500, to receive a VED reduction of £55 per year.

VED Rebates For Low Emission Lorries

"Tax incentives are creating a cleaner lorry fleet" Labour's Manifesto 2001

“The Government plans to introduce lower VED rates for lorries meeting the latest euro-IV standards from around 2004 “ Budget Statement 2001

• The Chancellor cut the amount of money given to lorry operators to encourage them to fit low emission technology. from £1,000 to £500 in the 2001 Budget.

Reducing The Administrative Cost Of Paying Lorry VED

“The Government will review the current arrangements for paying for lorry VED to see how it can be modernised to reduce the administrative cost of paying for lorry VED.” Budget 2001

• Consultants have been brought in by DVLA to evaluate and report on the benefits of a feasibility study into reform of VED payment systems.

Lorry Road User Charging

"We will ensure that hauliers from overseas pay their fair share towards the cost of our roads" Labour's Manifesto 2001

• UK hauliers must pay for using the roads in mainland Europe either through road tolls or a user charge (Euro-vignette). However, when foreign operator use UK roads they pay nothing.
• The Government has confirmed its intention to proceed with proposals for a distance based lorry Road User Charge, applicable to all lorries above 3.5 tonnes using UK roads. This will include foreign vehicles.

Green Fuels

"Duty on fuel gases will be frozen in real terms until 2004". Gordon Brown, March 2001 Budget

• The number of gas powered lorries in the UK has increased by 10% in the last year to 800. Industry spent £10 million on such vehicles in the last year on the strength of this promise.

Last updated: Wed Jul 21 14:31:27 2004