Government must overhaul road funding programme
11 October 2012
A new CBI report argues that the UK needs a gear change in investment, performance and efficiency if it is to develop a road network fit for the 21st century.
With public finances constrained, the Government must show bold thinking in how to secure new sources of funding to help support economic growth in the long-term, the head of the CBI said on Monday. Launching Bold Thinking: A model to fund our future roads, John Cridland, the CBI’s director-general, made a call to action from the Government to overcome the funding gaps in our creaking road network.
The UK economy is already losing up to £8 billion each year from congestion on the roads, which could potentially rise to £22 billion by 2025. The CBI is calling for the introduction of a Regulatory Asset Base (RAB) model to secure the private investment necessary to overcome the current funding gaps in the UK’s road network. A £10bn shortfall in funding for Highways Agency projects and the prospect of declining motoring tax revenue due to ever-increasing efficiencies in new vehicles makes the current model unsustainable.
A regulated model for the road network would address the problem of long-term funding and one year cycles by taking the road network out of the Government’s budget. Users would have a proportion of their motoring taxes converted to a user charge – controlled by the regulator – to access the strategic road network. This charge would provide a funding stream for private operators – licenced by the regulator – who would operate regional sections of the network. But in the long term the charge alone might not be sufficient to leverage the levels of future investment needed to finance bigger capacity projects.
Private operators would have to finance such projects through long-term borrowing, which could require additional revenue streams, such as tolling, above a standard charge. The regulator would continue to cap charges and manage the overall cost burden on drivers. To achieve this, the Government should examine the most suitable elements of existing RAB models in the UK, which have a track record in attracting private capital, regulating performance and controlling prices. Similar models have successfully been applied in other sectors and could open up major private sector investment over the long-term – the water industry alone has generated £98bn of private investment since the1980s, with capped charges on customers.
VED tax shake-up could impact BIK
11 October 2012
An influential ‘think tank’ is proposing replacing vehicle excise duty (VED) with a one-off charge on new cars based on CO2 emissions, which would be included in benefit-in-kind (BIK) calculations for company cars.
CentreForum says the Government would set an annual emissions "pivot point" equal to the emissions of the best performing 1% of cars the previous year. Cars with emissions below the 1% level would receive a subsidy. Cars above this level would attract an emissions charge at the time of purchase. For example, if the pivot point was 94g/km of CO2, cars with emissions above 94g/km would pay a first registration charge of between £35 to £50 per gram above 94g and cars with CO2 emissions lower than 94g would therefore receive a subsidy of £50 per gram below that level.
CentreForum says that this one-off charge would then be included in what is the current P11D price to calculate BIK liability.
Technology upgrade paves the way for a speed ....
03 October 2012
.... camera revival on UK roads
Staff choose cash over car for wrong reasons
03 October 2012
Employees offered a company car or a cash alternative should focus on the ‘true value’ of a company car, according to a tax expert.
The advice comes in the wake of a survey of more than 2,000 companies by Towers Watson, a global professional services company, which reveals that cash alternatives are outstripping company cars as the most popular benefit. Almost 80% of managerial level employees are eligible for car benefits with most offered the choice of a car or a cash alternative. Just 12% are offered only the car option. The survey shows that 57% of employees entitled to a company car have opted to take the cash.
Darryl Davis, senior consultant in Towers Watson’s Data Service division, said: “We have seen a steady increase in the value of car schemes per employee, but the trend has been for more schemes to move from company cars to cash-based allowances, or to offer employees a choice.”
Government figures on benefit-in-kind tax reveal a steady decline in the number of company cars over recent years. HM Revenue & Customs estimates that there were 950,000 taxable company cars in 2010/11, down from 970,000 in 2009/10. This is a fall of more than 20% over the past eight years, from 1.2 million company cars in 2004/05.
Jeff Whitcombe, director at BCF Wessex, said: “I have been surprised by some of the reasons suggested for the fall and I think the reduction is too easily attributed to increasing taxation. Since 2002, when the minimum was 15% of a car’s list price, the minimum appropriate percentage has fallen to as little as 5%, excluding EVs, and it won’t reach 15% again until 2016. Over this same period, the adoption of low- emission cars has been supported by the availability of first-year allowances, which significantly reduce the wholelife cost of qualifying cars.”
Whitcombe believes the double-dip recession has been the single-most influential factor. “With company car tax rates set for the next five years, as the economy improves I would encourage drivers and employers to use this to their advantage by planning ahead, and focusing on the true value of the company car,” he explained. “For example, take a higher-rate employee who is considering whether to take a Toyota Prius T3 as his new company car or to take a £7,000 gross cash alternative and make his own arrangements.
“With a list price of £23,950 and CO2 emissions of just 89g/km the income tax due this year would be £958, or just 4% of the car’s list price. If the employee took the cash alternative, he would pay tax and NIC of £2,940 and would then have to acquire, maintain and insure his own car.”
Paris Motor Show – new Range Rover
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