ABSTRACT
This chapter reviews the rationale for an environmentally linked fuel duty escalator through examining a range of evidence on the environmental damage caused by road traffic. It addresses the question of whether the fuel duty escalator is intended to be an environmental tax or a revenue raising tax with environmental linkages. The chapter deals with the key environmental concerns faced by the government and the policies that have put in place to manage these concerns. It presents key statements from budgets issued by the United Kingdom Government Treasury between 1993 and 2000 and the key changes to taxation policy and their environmental rationale. The chapter discusses the extent to which the taxation policy does and could represent the full social costs of transport. It considers the government response during the fuel crisis and the robustness of the policy approach. The chapter describes the case with respect to car travel but identifies key issues and reports relating to the haulage industry.
