Ahead of today’s UK Budget, Transform Scotland is calling for fairer transport taxation and greater investment in public transport to help tackle the cost of living, strengthen the economy and meet climate commitments.
The Chancellor’s Budget presents an important opportunity to change the direction of UK transport policy. At a time when households face continuing financial pressures, public finances are constrained and the climate emergency demands urgent action, the Government should prioritise measures that make sustainable transport more affordable, reliable and accessible.
For too long, transport taxation has sent the wrong signals. Successive UK Governments have frozen fuel duty while public transport passengers have faced rising fares. Meanwhile, aviation continues to benefit from favourable tax treatment. These policies encourage greater dependence on cars and planes rather than supporting the shift towards cleaner, more efficient forms of transport.
Transform Scotland believes that the Budget should begin to address these inequalities through five priorities.
1. Reform motoring taxation
The continued freezing of fuel duty, including the temporary 5p reduction, is increasingly difficult to justify. While the cost of living remains a genuine concern, across-the-board reductions in motoring taxation are poorly targeted and do nothing for households without access to a car.
More than one in four Scottish households (27%) have no access to a car, rising to more than half of households on the lowest incomes. Continued reductions in motoring taxation provide no direct benefit to these households, reinforcing the case for prioritising affordable and reliable public transport.
The Chancellor should set out a credible timetable for ending the temporary reduction and restoring the real value of fuel duty, alongside targeted assistance for those most affected by transport costs.
2. Take forward eVED as a precursor to national road user charging
The transition to electric vehicles is essential to decarbonising road transport. However, it also requires a fundamental rethink of how road use is taxed as revenues from fuel duty decline.
Transform Scotland strongly supports the early introduction of electric Vehicle Excise Duty (eVED) as an important first step towards a fairer system of road-user charging.
A mileage-based approach would establish the principle that road use, rather than simply vehicle ownership or fuel consumption, should contribute to taxation. Over time, this could provide the foundation for a more comprehensive system that reflects the wider costs of road use, including congestion and environmental damage.
The Government should proceed with eVED while ensuring that its implementation is straightforward, proportionate and sensitive to the circumstances of rural communities and people with limited transport alternatives.
3. End aviation’s favourable tax treatment
Aviation remains undertaxed relative to its environmental impact. Transform Scotland supports reforms that would ensure aviation makes a fairer contribution to public finances and climate objectives.
The Chancellor should examine the introduction of a frequent flyer levy, higher taxation of private aviation and measures to address the absence of fuel duty on aviation kerosene, taking account of international legal and practical constraints.
Such reforms should be designed to protect occasional travellers while ensuring that those responsible for the greatest environmental impacts contribute appropriately.
4. Prioritise investment in public transport
Transport taxation cannot be considered in isolation from transport investment. People need affordable, reliable alternatives to private car use if Scotland is to reduce traffic and transport emissions.
The UK Government should prioritise public transport over further road expansion, with additional resources for bus services, rail infrastructure, network resilience and the transition to zero-emission fleets.
For Scotland, additional funding and appropriate devolved investment decisions could support the renewal of ageing train fleets, improvements to rural and inter-city rail services, more reliable buses and better provision for walking, wheeling and cycling.
The Government should also recognise the wider economic benefits of sustainable transport investment, including improved access to employment, reduced congestion and greater resilience to future energy price shocks.
5. Make fair transport pricing a central economic objective
The ultimate objective should be a transport system in which sustainable choices are also the affordable and convenient choices.
The UK and Scottish Governments must work together to ensure that taxation and investment policies support this objective. Revenue raised from reforms to transport taxation should help fund better public transport and active travel, with particular attention to communities currently poorly served by sustainable alternatives.
The transition must be fair. People who depend on cars, particularly in rural areas, should not be penalised without consideration of their circumstances. But fairness must also extend to the many households that cannot afford a car and depend on public transport for their everyday journeys.
The Budget offers the Chancellor an opportunity to begin correcting the longstanding imbalance between the taxation of private transport and the funding of sustainable alternatives. A fairer system of transport taxation, accompanied by investment in better public transport, would benefit households, businesses, public finances and the environment.
Please note this article has now been superseded by our response to the UK Budget, available to read here.
