Drivers take the biggest hit on ‘environmental’ taxes

In case drivers were in any doubt about where so-called ‘environmental taxes’ hit hardest, then new figures from the UK’s official Office of National Statistics spell out just how much we’re coughing up to fund government expenditure.

By far the biggest contribution drivers make to the national coffers comes from fuel duty, which is the cash the government rakes in from every litre of petrol or diesel you put in your tank. In total in 2024, that number hit the £24.6 billion mark. Fuel duty has been the biggest component of energy taxes since 1997, with a similar amount raised annually by schemes such as the Climate Change Levy on energy companies, which adds costs to domestic electricity bills - also paid by many drivers, of course.

Energy taxes form the biggest chunk of revenues falling under the ONS ‘environmental tax’ umbrella, but transport taxes are also a big component. Once again, drivers take the most punishment here, with motor vehicle duty paid by UK households and businesses as ‘road tax’ amounting to £8.2 billion.

That means tax on motor vehicles make up almost £33 billion of the £54.2 billion raised by environmental taxes in 2024. The ONS describes these taxes as “those whose base is a physical unit, for example, a litre of petrol or a passenger flight, that has a proven negative impact on the environment. These taxes should reduce the activity related to these units and therefore reduce negative environmental impacts”.

Last week former Prime Minister Tony Blair ran into trouble with the current Labour administration after saying the UK’s net zero environmental policies were “doomed to fail” and losing sway with voters.

Jack Cousens, the AA’s head of roads policy, responded to the latest figures by saying that “drivers will be staggered” by the contribution they’re making to environmental taxes, and that although most expect petrol and diesel car use to come with some sort of tax penalty “the share of the tax-take will be a shock”.

The AA also takes issue with the number of what it calls “stealth taxes” on drivers levied by councils under the environmental banner.

“Environmental taxes now being levied by councils, including those that can reasonably be labelled as stealth taxes, include CO2-related residents parking permits, diesel-related residents parking permits, diesel-related public parking charges, workplace parking levies, city or town parking costs where the council has stated a CO2 justification for high fees,” says Cousens, calling for “the huge amount of money collected by them to be accounted for, and laid bare to the public.”

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