Transport innovation of the week: distance-based road taxes

Make Wealth History

The Wolfson Economics Prize is run by Policy Exchange and seeks to encourage innovative ideas in economics. It has run three times in the past, each time with a specific question. This year’s was on transport, with entries invited in response to this question: ‘How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?’

The winner was Gergely Raccuja with a rather straightforward proposition: scrap Fuel Duty and Vehicle Excise Duty, and replace them with a charge per mile, calculated and paid annually.

Motorists in Britain pay two main taxes. First, you have your vehicle tax. This has been around since 1888 and was originally to pay for road construction. Today it’s lumped in with general taxes, but the general principle is that you pay a share into the roads budget for the…

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