Taxes applied to different transport modes do not reflect their different levels of greenhouse gas emissions. This means the transport system is not paying its fair share for the emissions it produces, with relatively little tax raised from aviation and shipping. Beyond its climate impacts, transport has other negative effects on society that also need to be reduced, including air pollution and congestion. The tax system is one way to tackle them.
Transport is changing rapidly in the race to reach net zero carbon emissions by 2050. Without tax reform, the move to electric vehicles will reduce fuel duty revenue by up to £28 billion a year. By 2035, road transport will be a long way ahead of aviation and shipping on its path to net zero.
This report argues that tax reform would help to create a cleaner, fairer transport system while providing sustainable revenue that averts the potential fiscal black hole caused by the current system.