Vehicle Usage Taxation (VUT) needs a new model in the 21st Century

Globally, there needs to be a new way to tax vehicle usage to encourage sustainable road transportation. This article suggests a new model that is fair to all and gives all types of vehicle manufacturers incentives to make vehicles more sustainable. i.e. vehicles should only be replaced when they are no longer viable.

Currently, petrol and diesel vehicles are taxed based on the fuel they use: the more you drive, the more fuel you use, and the more tax you pay. But with zero-emission and hybrid vehicles, we need a different way to tax road usage.

A single per-mile tax for all vehicles would be unfair and expensive, especially for owners of older vehicles. So, we should keep taxing fuel for older vehicles.

The new tax model should encourage the use of sustainable vehicles now and in the future. It should be easy for everyone to switch to this new system and allow for different types of vehicles and fuels.

The model should also recognize that the best approach is to use vehicles until they are no longer sustainable. Currently, vehicle manufacturers make more money by selling new vehicles, than by maintaining old ones. So, the new model should give manufacturers a way to earn money from vehicles throughout their life.

The tax for non-CO2 and hybrid vehicles needs to consider the distance travelled. With the cost per mile should vary based on the type of vehicle, its weight, and its age to balance sustainability and road wear. For example, commercial vehicles should have their loaded weight factored into their pay-per-mile rates.

The model should also reflect investments in roads. With some of the tax revenue going directly to road maintenance authorities. Existing road tolling and congestion schemes can stay in place to reflect local conditions.

There are special cases, like towing trailers, agricultural vehicles, vehicles on private roads, and rental vehicles. The current fuel-based tax system works for these situations, but the new model needs to manage zero-emission and hybrid vehicles in these situations. 

Vehicles used off-road, on private roads or close to monitored roads require specific checks to avoid incorrect billing.  Vehicles on private roads may create a unique situation, where the road owner might want to receive some tax income or exempt journeys from the tax.

Towing trailers with zero-emission and hybrid vehicles adds an additional complication, because trailers aren’t always attached to vehicles. These vehicles need to be able to report when they are towing to apply a surcharge based on their towing capacity.

Managing rental, leased, and hire-purchase vehicles can be done by maintaining a relationship between the vehicle owner or users and the manufacturer. Private vehicle sharing is an exception where the owner would need to handle the costs and recover them from the driver.

The proposed model has vehicle manufacturers monitoring vehicle use and reporting journeys, for which they receive income. Governments would manage the charging rates. This creates a new income stream for manufacturers and helps maintain their relationship with vehicle owners throughout the vehicle’s life.

Finally, the model needs to handle travel between different regions or countries. This requires agreements between governments and vehicle manufacturers to share relevant journey data.

This type of complex model could help everyone involved in transportation become more sustainable. Providing a fair vehicle usage tax system to all, while transitioning from the current fuel-based tax system without further complicating any vehicle ownership taxation.  

This government to business to consumer (G2B2C) model, can design in regulations such as data privacy and EV battery recycling.  Whilst supporting any necessary opt outs and potentially new vehicle usage insurance opportunities.