Government looks at two-tier road tax system

Government officials are considering a new ‘two-tier’ Vehicle Excise Duty (VED) that could see motorists who use major A-roads and motorways paying a higher rate than those who only use smaller roads.

Cameras using number plate recognition technology would then be used to make sure drivers using motorways have paid the higher rate.

The proposal is one of several options currently being considered by ministers as part of a Government review of transport funding, which follows concerns that increased fuel efficiency could lead to a decline in revenue for the treasury.

VED currently brings in around £6billion a year, but this is expected to fall dramatically as motorists switch to more efficient cars which qualify for lower rates.

However, a number of motoring groups, including the AA, have warned that this kind of system could lead to some drivers being priced off major roads, which would cause more congestion and slower journeys.

Other proposals currently being considered include the introduction of road tolls controlled by private companies, as well as replacing the annual tax with a one-off, up-front sales tax on all new cars.