Supplementary memorandum by Professor
Alan McKinnon (RP 34A)
Responses to the Customs and Excise Document
entitled "Professor McKinnon's criticism of LRUC and his
proposed alternative"
RESPONSE TO
LRUC CRITICISMS
"We have never said explicitly what the technical
solution for LRUC would be. Progress Reports have stated Ministers'
views that the market should decide the optimum solution, which
may well involve GPS."
The LRUC Second Progress in 2003 (para 2.16)
gave a strong hint that GPS would be required: "satellite-based
systems therefore probably offer the best way forward, since they
have the most flexibility for charging all roads, and for offering
other services to hauliers". Also, in conference presentations
given prior to the start of the procurement process in May 2004
(eg Motor Transport conference Beaconsfield, November 2003
and RHA Scottish annual conference in Dundee, March 2004) Customs
and Excise officials portrayed the main charging scheme as involving
the use of GPS and low user scheme probably requiring microwave
technology.
It is general acknowledged that to achieve the
required tolling capability specified in the procurement prospectus,
the Government has no choice but to use GPS.
"We need a certain level of sophistication
as paper-based or very simple approaches involve unacceptable
fraud risks and high compliance costs."
It would be necessary to compare the "fraud
risks and compliance costs" of the sophisticated scheme planned
for LRUC with those of a simpler system. Even if the compliance
costs of the simpler system were higher, these could be more than
offset by much lower set-up and operating costs.
"We have never said that a level playing
field with foreign hauliers was the only policy objective of LRUC."
This has been presented as the main reason
for LRUC. Indeed in his oral evidence to the Transport Committee
on 26 January, the Secretary of State for Transport said that
"the rationale behind the lorry scheme is to ensure that
foreign hauliers pay their fair share for using the roads."
The key issue here is whether it is necessary at this stage, given
the declared objectives of LRUC, to create a complex system
which tracks vehicles and permits variable tolling by road and
time of day. We do not believe that it is.
"No decision has yet been taken on the threshold"
(for "low use" operators).
C&E officials quoted a figure of 12,000
kms for this threshold in presentations given prior to the procurement
process. That is why this figure was used in our earlier reports.
RESPONSE TO
CRITICISMS OF
THE PROPOSED
ALTERNATIVE METHOD
OF ROAD
USER CHARGING
FOR TRUCKS
1. "The system purports to be manual,
simple to operate and consistent for all hauliers." This
"treats foreign hauliers in a fundamentally different way
(demanding payment on leaving the country, registration and issuing
of a card)."
It is correct that foreign hauliers will have
a different registration process, but this also applies to the
truck tolling systems currently in operation in Germany, Austria
and Switzerland and is also likely to be a feature of LRUC. Until
full inter-operability of lorry road charging system is achieved
across the EU and a centralised vehicle registration system established,
foreign vehicles will have to be separately registered by tolling
authorities in each country. Systems will also have to be put
in place to collect tolls from foreign vehicles leaving the country,
either with payment at the point of departure or subsequent billing
for those foreign hauliers that have set up accounts with the
UK tolling authority.
Foreign hauliers could register online at a
multi-lingual website, removing the need for manual registration
at the point of entry. The German tolling system, for example,
permits registration on the internet. This appears to have been
working well since the re-launch of the tolling system in January
2005.
We suggested that "smart registration cards"
be issued to foreign operators as this is a system that works
effectively in Switzerland. As discussed more fully in paragraph
19 (and as C&E suggests in its critique), it might not be
necessary to introduce smart cards in the UK. After initial registration,
information about the vehicle and operator could be held on a
computer database. Retrieval of this information could be activated
by entering the vehicle's registration number or automatically
scanning it from the number plate.
The same system would be used for reading distances
from the vehicle tachographs on foreign and British-registered
vehicles. In Switzerland, special cameras are placed over the
tachograph to take the reading. This operation takes only a few
minutes. In Switzerland, this is used to check the accuracy of
a sample of distance-readings for enforcement purposes. In the
UK it could be applied to all lorries entering and leaving the
country to provide an electronic record of distance readings.
The introduction of digital tachographs will facilitate the recording
of distance data. It will be possible to download this information
directly through a connector on the front of the device.
2. It "will require much greater presence
at the ports `targeting' non-UK hauliers, contrary to EU legislation."
Any system of spot checks required to deter
the under-reporting of tachograph distances would apply equally
to British international hauliers and foreign hauliers. There
would therefore be no discrimination against foreign operators.
One could avoid the need for self-declaration and spot checks
by photographing / scanning all conventional tachographs and downloading
the relevant information from all digital tachographs.
3. The "proposals seem very likely to
conflict with EU law".
Trucks without on-board units crossing the German
border pass frontier control points at which they must register
and pay for the trip they are planning to make on the autobahn
network. They can avoid this by registering online, as outlined
above. These manual and online options would be available in our
system. As the German Maut is deemed acceptable under EU rules,
it is not clear why our proposed system would not comply.
4. "Complex technology should not be
seen as a problem (why shouldn't we be confident enough to develop
it)"
The Government's past record in introducing
large-scale IT systems does not inspire confidence. It is good
business practice always to find the simplest and most cost-effective
way of achieving one's objectives.
It is alleged that our system would be inferior
in terms of efficiency, ease of use, accuracy and integrity. Until
the nature and cost of the LRUC system is determined at the end
of the procurement process and our system has been fully specified
and costed it is not possible to make such a comparison. It would
also be wrong to make a direct comparison, as our system has more
modest goals.
Contrary to the C&E claim, our system would
not "impose quite a lot of extra manual record keeping".
It would rely on existing systems of data and revenue collection:
— Annual distance readings would be
taken from tachographs at the time of the annual road-worthiness
inspection. The inspector could key the information into a hand-held
terminal, creating an electronic record and eliminating the need
for a paper record of annual distance-travelled. This information
is not routinely collected at the moment though this is being
considered by VOSA. Analysis of this distance data would enable
VOSA to determine more accurately the relationship between the
vehicle's condition and distance travelled and thus help them
to improve the targeting of non-compliant vehicles. Collection
of the mileage data would therefore yield spin-off benefits for
VOSA.
— Companies are required to retain
receipts from fuel purchases for VAT purposes. They will presumably
also have to retain them for the fuel rebate system accompanying
LRUC. Any electronic system that is developed for recording fuel
purchases for LRUC could be applied equally well to our system.
5. "All HGVs would have the tachograph
distance recorded at the annual MoT inspection for the purpose
of levying a km-based toll." This would create a "significant
risk of fraud". "Any tachograph fraud would be automatically
translated into LRUC fraud".
Operators might be tempted to reduce the distance
reading on the tachograph to cut the annual road toll. The rebating
of fuel duty at benchmark levels of fuel efficiency, however,
would make this counter-productive. The lower the distance reading,
the lower would be the eligible fuel rebate. Care would have to
be taken in setting the benchmark fuel efficiency level to ensure
that the rate at which fuel duty was rebated per km travelled
did not exceed the per km toll rate.
The main form of tachograph fraud at present,
relating to drivers' hours, would not have any impact on the distance
readings.
6. Having the MoT inspector record or validate
the distance readings would be "wide open to collusion".
All of these MoT inspectors are employed by
the government vehicle inspection agency, VOSA. Are C&E effectively
suggesting that a significant number of these government inspectors
are dishonest? Moreover it is likely that these inspectors will
also have a role in checking on-board units within the LRUC system.
If they are dishonest, the integrity of the LRUC system will also
be compromised. Our system has the advantage that the rebating
of fuel duty at benchmark levels will discourage the under-reporting
of mileage as this will incur a financial penalty.
7. Annual billing would create "adverse
cash flow implications"
The end-of-year reconciliation of annual road
toll and fuel duty would involve the transfer of relatively small
sums of money. The main revenue stream would remain fuel duty
paid on a regular basis throughout the year. For most operators
the payments would represent a very small proportion of total
turnover. In the case of larger operators, the annual cycle of
toll payment would be staggered across the fleet (reflecting the
phasing of vehicle purchases/annual inspections throughout the
year). This would spread the reconciliation of toll payments and
fuel rebates across the year and ease any cash flow problems for
individual operators.
8. Need to put mechanisms in place to allow
for vehicles changing hands between annual inspections.
A procedure for dealing with this situation
was outlined in our "Taxing Trucks" paper[80]:
"The V5 form which is used
to register the sale of vehicles with the DVLA currently has an
optional mileage box that can be completed by the seller. It would
be necessary to make the recording of this distance information
compulsory. This too is likely to be self-enforcing. The seller
would, after all, not be able to claim back the duty paid on fuel
consumed by the vehicle without a record of the distance travelled
up to the time of sale. The purchaser, on the other hand, would
be liable for the mileage travelled prior to the sale but have
no fuel duty receipts against which to offset the tolls."
Both parties would have to agree on this mileage.
The distance reading at the time of sale would
therefore be captured by DVLA and fed into the central data-base
of the tolling authority. For the previous owner, the reconciliation
of the road toll and fuel duty would take place shortly after
the date of the sale in a final settlement with the tolling authority
for that vehicle. For the new owner, payment of the toll and fuel
duty rebating would occur at the time of the next MoT test and
relate only to the distance travelled since the vehicle was purchased.
9. Case of "short term hire where the
operator of the vehicle changes frequently".
The hiring company, as registered owner of the
vehicle, would be liable for the annual distance-based toll. It
would therefore charge clients for the toll they incurred during
the period of hire. By providing receipts for the fuel purchased
during this period, the client would qualify for a rebate on this
distance charge. The hiring company would rebate the fuel duty
paid at the official benchmark level of fuel efficiency applied
by the Government. After all, at the end of the year when the
hiring company is reconciling road tolls and fuel duty for each
vehicle, this will be done at benchmark fuel efficiency levels.
Very little extra administration would be created for hiring companies
as they routinely record the tachograph distance and fuel levels
at the start and end of a hire.
10. If the rate changes during the year,
the annual distance reading would have to be "supplemented
by manual readings taken at the time of the rate change (with
inherent risk of fraud and additional compliance burden for hauliers)."
Drivers are required to write the vehicle distance
on the tachograph disk at the start and end of a shift. All lorry
operators are required by law to keep tachograph disks for a year.
They would simply have to bring the tachograph disk for the date
on which the toll-rate changed to the vehicle test station where
the annual inspection was being performed. In years during which
the rate changed, therefore, the inspector would record both the
end-of-year mileage and the mileage on the date of the rate change.
This could be defined as the start mileage on the disk relating
to the first shift of that day. This additional distance reading,
like the annual mileage, could be keyed into a computer at the
vehicle test centre. It could also be downloaded electronically
from the new generation of digital tachographs.
11. "Solution can only work with one
rate for all roads . . ."
We made it clear in the "Taxing Trucks"
report that, by not tracking vehicles, our alternative system
would not allow the Government to vary toll rates by road type
and time of day. In this report, we also explained why we do not
believe that it will be necessary, for at least a decade, to vary
toll rates in this way.
12. "Distance travelled outside the
UK would be captured by the driver taking a tachograph reading
when they exit and enter the UK. The whole scheme depends on self-declarations—expecting
drivers to accurately record their mileages every time they leave
or arrive in the country is unrealistic and who would be liable
for errors."
As explained in paragraph 1, self-declaration
of mileages could be replaced by the photographing/scanning of
tachographs on all lorries entering and leaving the country
(or data downloads from digital tachographs). This could eliminate
the risk of drivers giving the wrong distance reading either accidentally
or fraudulently.
13. "No semi-manual system can cope
perfectly with a land border, and the problems are exacerbated
in `local' environments such as Northern Ireland where any individual
vehicle crosses the border frequently." "A scheme of
this description could not be operated in (sic) the Northern Ireland
land boundary where no routine Customs presence currently exists."
We agree that it would be impossible to operate
our system in Northern Ireland. Northern Ireland will also pose
formidable problems for LRUC, however. As there are over 300 uncontrolled
border crossing points, it is not clear how the LRUC system will
address this issue. In a written answer to a Parliamentary question
on this subject (19 January 2005), the Treasury Minister responsible
for LRUC gave no indication of how the problem might be solved.
He replied that C&E "are including these requirements
in their specification for a modern, automated system for the
UK".
We believe that it will be extremely difficult
to develop a robust system of lorry road user charging for Northern
Ireland, with or without the use of sophisticated telematics,
and would recommend that the province be exempted until a compatible
system can be developed with the Irish Republic, possibly within
a broader EU road tolling framework. Until this can be achieved,
lorries registered in Northern Ireland would be treated in a similar
manner to foreign-registered vehicles.
Our proposed system would therefore be confined
to the UK mainland.
14. "The nature of foreign haulier travel
in Switzerland is different to that experienced in the UK. Foreign
hauliers in Switzerland are mainly through traffic; this is not
so for the UK."
It is not clear why this would present a problem
for our system. The fact that foreign vehicles account for a much
smaller proportion of lorry-kms in the UK than in Switzerland
and that the daily volume of international lorry traffic moving
to and from the UK is less than a third of that crossing Swiss
borders would make it easier to implement our system here.
15. "Such a system would be costly to
administer and would no doubt suffer from higher levels of fraud
than an automated system would."
We have not been able to cost our system. Nor
do we know at this stage what LRUC will cost to implement and
operate. We believe, however, that our system would be an order
of magnitude cheaper to set up and operate than LRUC. We have
explained in other paragraphs how the risk of fraud could be minimised
and kept within acceptable limits.
16. "Examination of commercial records
of overseas taxpayers would also prove to be problematical".
The only "commercial records" that
foreign hauliers would be required to show would be the receipts
for fuel purchased in the UK to permit the calculation of their
fuel rebate. They would have a financial incentive to retain and
show this evidence of fuel purchases.
17. "Distance travelled outside the
UK would be aggregated and deducted from the total mileage . .
. Possibility of fraud arising from mis-declarations on non-UK
distance travelled could be an issue here."
We explain in paragraphs 1, 12 and 22 (below),
how fraudulent "mis-declarations" of tachographs distances
could be prevented.
18. "Toll is calculated by applying
mileage in the UK to fixed vehicle-related factors." This
"cannot cope with journey related differentials, such as
the presence of a drawbar trailer, which is necessary if we are
to avoid discrimination."
It is true that our system would not permit
changes to the vehicle specification on a trip by trip basis.
As explained in our "Taxing Trucks" report, it would
employ the procedure currently adopted in the determination of
vehicle excise duty (VED). At time of registration the operator
would define the gross (plated) weight of the vehicle and axle
configuration. An operator wishing to have flexibility to vary
the number of axles on an articulated unit or to attach a drawbar
trailer would pay a higher rate, as is the case at present with
VED.
19. Issue of a "smart registration card"
to foreign-registered lorries. "The requirement for a card
seems unnecessary; provided the registration data are recorded
centrally, why does the haulier need a card?"
The smart card system operates very effectively
at Swiss border control points. Several hundred thousand cards
have so far been issued by the Swiss government to foreign vehicles.
In contrast, foreign vehicles account for only around 2,000 of
the 55,000 onboard units supplied by the Swiss government. Although
these OBUs are available free of charge to foreign operators,
the vast majority are content to use the manual system involving
the use of smart cards.
As explained in paragraph 1, however, we accept
C&E's point that these cards might not be necessary in the
UK. Once a vehicle has been registered, its details could be stored
on a central computer file. Automatic Number Plate Recognition
(ANPR) could be used at the ports and the Channel Tunnel terminal
to identify the vehicle and activate retrieval of its computer
record.
20. "Payment of a toll at exit points
to the UK could create a fiscal barrier."
This criticism has been addressed above in paragraph
3.
21. "It also implies that the driver,
rather than the operator, is liable for the charge, which we have
already discounted as unworkable and unfair."
It is not clear why C&E have rejected this
practice as "unworkable and unfair". Drivers are expected
to buy fuel for their vehicles and pay tolls on estuarial bridges
and tunnels. Many of them regularly pay tolls on motorway links
in France, Spain and Italy and on the M6 toll road here in the
UK. Some also pay for the ferry/Channel Tunnel crossing at point
of use. There is little evidence that this creates problems for
the drivers, operators, filling stations, ferry companies or toll
collection agencies.
If companies did not wish to have their drivers
take responsibility for paying the UK distance charge with cash
or credit card, they could set up an account with a facility for
direct billing.
22. Presumably . . . "random checks"
would be compared against the annual declarations made by hauliers.
The very fact that they are annual could make this difficult to
reconcile, and it would be almost impossible to establish that
there had been no attempt to uplift the overseas distance declared'.
This is based on a misunderstanding of the role
of "random checks". These would take place solely at
the ports and Channel Tunnel terminal and would be applied equally
to British- and foreign-registered vehicles. Our original proposal,
partly modelled on the Swiss tolling system, would have involved
checking a sample of vehicles at points of entry and exit to confirm
that the self-declared tachograph distance readings were accurate.
In Switzerland, officials at the border control points use special
cameras which can be placed over the tachograph to record the
distance. If this distance is significantly different from that
declared by the driver, a heavy fine is imposed. This system works
well and strongly deters drivers from giving fraudulent distance
readings.
The layout of border control points in Switzerland
and large volume of cross-border lorry traffic would make it difficult
to photograph the tachographs of all vehicles without on-board
units. As access to the UK mainland is through a limited number
of ports with all vehicles passing booths (for ticket checking
and passport control) it should be possible to digitally scan
all tachographs, using a device similar to that employed
in Switzerland. Downloading the mileage data from digital tachographs
would be even quicker and easier. These operations would take
only a few minutes to complete.
23. "Benchmark fuel efficiency figures
would be used to calculate the rebate for different vehicle categories."
"Some system of fuel purchased declaration would have to
be operated" for UK hauliers buying fuel abroad. "In
reality this would mean that all hauliers would need to keep a
record (and make a declaration of) fuel purchased in the UK. If
such a system was purely manual, potential fraud figures could
be extremely high."
It is correct that all UK hauliers would have
to retain a record of fuel purchased in the UK. A large and increasing
proportion of the fuel consumed by lorries in the UK is bought
using fuel card accounts for which verifiable electronic records
are available. For fuel purchases made by other means, paper-based
records would have to be retained. In accordance with VAT regulations,
all businesses have to maintain these records anyway. The retention
of these records of fuel purchases is not, therefore, any additional
burden imposed on the haulage industry nor a new potential source
of fraud. It is something that they are already required to do.
The fuel duty rebate system which will accompany the LRUC will
also require operators to retain records of fuel purchased in
the UK. No details have yet been given of the Government's proposed
fuel rebate system. Whatever method it uses for recording and
validating fuel purchased in the UK could also be used by our
system.
24. Several objections are raised to the
practice of using fuel efficiency benchmarks for the rebating
of fuel duty. These can be summarised under five headings:
(i) More fuel efficient "makes"
of vehicle would qualify for some repayment of fuel duty. Operators
of these vehicles would have an incentive to over-report distance
travelled to maximise the repayment. Conversely, operators of
less fuel efficient "makes" would try to under-report
distance.
This point not only relates to the "makes"
of vehicle but also to differences in the general energy efficiency
of distribution operations. As explained in paragraph 5, the rebating
of fuel duty at an appropriate benchmark level of fuel efficiency
would deter operators from under-reporting the annual distance
travelled. To prevent operators from gaining a financial benefit
from over-reporting the distance travelled, and thereby defrauding
the fuel rebate system, it would necessary to limit the value
of the fuel duty rebate to the actual amount of fuel duty paid.
In our "Taxing Trucks" report we raised
the possibility of some duty being repaid to fuel efficient hauliers
as part of an end-of-year reconciliation of fuel duty and road
tolls. We now concede that this could not be permitted. Restricting
the fuel duty rebate to the actual duty paid, would not only discourage
fraudulent over-recording of the distance travelled, but also
remove any incentive for UK-registered operators to purchase fuel
outside the country. Some hauliers' transport operations might
appear fuel efficient on the basis of receipts for fuel purchased
in the UK, when in fact they were running some of their UK road
mileage on fuel bought abroad. Requiring operators to provide
evidence of UK fuel purchases and restricting rebates to the actual
fuel duty paid in the UK would strongly discourage this practice.
(ii) Fuel efficiency varies by type
of area, road conditions, make and model of vehicle etc. A broad
range of benchmarks would have to be devised to accommodate this
variability and "a whole industry set up to challenge the
decisions taken by C&E staff about the real fuel efficiency
of vehicles".
This issue is addressed in our "Taxing
Trucks" report:
"The use of average fuel efficiency benchmarks
would penalise companies whose distribution operations are intrinsically
more energy-intensive, but then the current system of fuel taxation
also discriminates against companies with more energy-intensive
operations. At present they pay more fuel duty per tonne-km and
their logistical systems and pricing policies will have adjusted
to this. It would be possible to vary the benchmark mpg values
by industrial sector or type of distribution operation. Through
time, the accumulated fuel efficiency data could be used to `fine-tune'
the fuel rebate system. This, however, could undermine one of
the strengths of the system, which is its relative simplicity."
The benchmarking system would encourage manufacturers
of less fuel efficient vehicles to improve their fuel performance
and generally promote greater energy efficiency across the haulage
industry. The only alternative to using a benchmarking system
is to refund duty on all the fuel consumed by a vehicle and thus
discourage fuel economy. This does not only apply to our proposed
method of road user charging. In developing a fuel duty rebate
scheme for LRUC, C&E will encounter exactly the same problem.
(iii) "If the fuel duty rebate
changes mid-year, it would require manual tachograph readings
at the time of the rate change."
This could be addressed in the same way as a
change in the distance toll rate. As explained earlier in paragraph
10, an operator would be required to bring the tachograph for
the date of the fuel duty change to the annual vehicle inspection
so that the starting mileage on that day could be recorded in
addition to the annual mileage.
(iv) "Fuel rebate is calculated
according to mileage in the UK rather than litres of fuel purchased
in the UK." Need for hauliers to provide record of fuel purchased.
"It is a lot of paper for the haulier to keep safe for up
to 12 months."
It has been acknowledged in earlier responses
that hauliers will have to retain evidence of fuel purchases in
the UK. To summarise our earlier comments on this issue:
— Many operators now have electronic
records of fuel consumption and this should be encouraged as good
management practice.
— Hauliers have to retain records of
fuel purchases anyway for VAT purposes.
— The LRUC fuel rebate system will
also require hauliers to retain records of fuel purchases.
It is worth emphasising too that our alternative
system will not create a major new revenue stream and require
the disbursement of billions of pounds of fuel duty. It will involve
a relatively small-scale financial reconciliation once a year
for each lorry.
(v) Buying fuel outside the UK would
effectively enable British hauliers to get a "reduced rate
for the toll". "How much fuel does one need to buy to
be eligible for the reduced toll rate?"
Applying the general rule outlined in paragraph
24(i) would adequately deal with this problem. The question about
"eligibility for the reduced toll rate" would then be
irrelevant.
25. Tolling station infrastructure at ports.
"We may not be safe from challenge that there is any `unreasonable'
delay for a haulier at the frontiers".
The extra time required to record tachograph
distances and make toll payments at the ports would be very small
relative to the total time that a typical vehicle spends at a
UK port or the Channel Tunnel terminal. The additional activities
required by our proposed road charging system would take only
a few minutes and cause minimal disruption and delay. Operators
could also streamline the process by registering vehicles online
prior to their first entry to the UK. It is unlikely therefore
that the current congestion problems at major RoRo ports such
as Dover would be exacerbated. Moreover, under the LRUC scheme,
foreign-registered vehicles are likely to be stopped at the ports
for registration and payment.
CONCLUSION
It is possible to address all but one of the
shortcomings identified in the C&E critique. The insurmountable
problem for our alternative method of lorry road user charging
is that presented by the Northern Ireland land border. This is
a problem, however, that will afflict all systems of lorry road
user charging and will only be satisfactorily resolved when the
whole of Ireland is subject to the same system distance-based
charging, probably within the context of an EU-wide tolling system.
In the light of C&E criticisms and feedback
received from other organisations, we have made several modifications
to our original proposal:
— The value of the fuel duty rebate
must not exceed the actual duty paid as verified by evidence of
fuel purchases in the UK.
— Distance readings at the ports and
Channel Tunnel terminal should be taken from all lorries
and not rely on self-declaration and spot checks. Technology exists
to collect this information quickly and reliably.
— It would not be necessary to issue
foreign-registered vehicles with smart cards.
— Procedures have been outlined to
deal with vehicles on short-term hire and changes in toll rates/fuel
duty during a vehicle's annual cycle.
Some of the points raised by C&E had already
been anticipated and discussed in our Taxing Trucks report. Others
appear to have been based on a misinterpretation of what we originally
proposed.
Many of the practical difficulties that would
be encountered in implementing our system, particularly relating
to the rebating of fuel duty, will also affect LRUC. For example,
C&E have challenged the principle of rebating fuel duty at
benchmark levels of fuel efficiency. The alternative, however,
would be to refund the actual fuel duty that an operator paid.
This has the disadvantage of favouring less fuel efficient operators.
The lower their fuel efficiency, the larger would be their rebate
and hence the lower the effective km-toll toll rate they would
be paying. It is not clear how this anomaly could be corrected
without recourse to some system of fuel efficiency benchmarking.
Criticisms of our approach are one-sided at
this stage as the LRUC system is yet to be specified. It would
be fairer to compare LRUC with our alternative method using a
standard set of criteria such as cost effectiveness, risk of fraud,
burden on industry, technical robustness, implementation time
etc. Until the LRUC contract is awarded and the system specification
made public it is not possible to make such a comparison.
Overall, we believe that C&E's assessment
of our proposed method exaggerates the amount of new paperwork
required, its vulnerability to fraud and the extent to which "fiscal
barriers" would be created at the ports. It also fails to
acknowledge the merits of our system which are its low cost, low
risk and close alignment with the Government's declared policy
objectives of:
— Levelling the competitive playing
field with foreign hauliers.
— Decoupling the taxation of trucks
from that of cars and vans.
— Moving to a system of distance-based
taxation.
80 A C McKinnon and D McClelland "Taxing Trucks:
An Alternative Method of Road User Charging" Logistics
Research Centre, Heriot-Watt University, Edinburgh, July 2004.
http://www.sml.hw.ac.uk/logistics Back
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