‘Pay-by-the-mile’ tax being considered to cover shortfall following switch to EVs

Treasury paper outlines national road pricing scheme to plug £40 billion hole caused by move to electric cars

‘Pay-by-the-mile’ tax being considered to cover shortfall following switch to EVs
Image: Bigstock.

Rishi Sunak is considering plans to charge motorists ‘by-the-mile’ amid concerns over a £40 billion tax shortfall created by the switch to electric cars, The Times reports.

The newspaper reported that the chancellor was “very interested” in the idea of a road pricing scheme.

It comes as the Prime Minister confirmed plans to end the sale of all new petrol and diesel cars from 2030 and new hybrid and plug-in hybrid cars that can “drive a significant distance without emitting carbon” from 2035.

According to the Institute for Fiscal Studies, fuel duty – frozen since 2011 – brings in around £28bn in a typical year with the balance coming from VAT on fuel sales and VED.

Related: Petrol and diesel car ban to be enforced from 2030, Boris Johnson confirms

Rishi Sunak is keen to replace lost fuel duty and vehicle excise duty (VED) as the UK’s shift to electric vehicles gathers pace.

Recent figures from the Society for Motor Manufacturers and Traders (SMMT) shows that almost 76,000 battery electric vehicles have been driven from showrooms in the year to date.

In comparison, more than a million petrol and diesel-powered cars have been sold.

However, the figures do indicate a shift in behaviour as the range of electric models on offer is expanded.

Related: British firm launches classic Mini electrification kit

The SMMT stats show a 168 per cent increase in electric sales this year, while petrol and diesel is down more than 39 per cent and 50 per cent respectively.

AA president, Edmund King said: “The government can’t afford to lose £40bn from fuel duty and car tax when the electric revolution arrives.

“It is always assumed that Road Pricing would be the solution but that has been raised every five years since 1964 and is still perceived by most as a ‘poll tax on wheels’.”

Opinion: Act now or your garage will miss out on EV opportunities

RAC head of roads policy, Nicholas Lyes, said: “While not paying car tax is clearly an incentive to go fully electric at the moment, we will very soon need a system that can levy tax on both conventionally fuelled and battery electric vehicles fairly.

“If this isn’t addressed, we risk finding ourselves in a situation where petrol and diesel drivers continue to pay all the tax for using the roads which is unsustainable.”

A “pay-as-you-drive” concept was last explored by Tony Blair’s government in 2007 but was abandoned due to opposition from motorists.

Home Page Forums ‘Pay-by-the-mile’ tax being considered to cover shortfall following switch to EVs

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  • #203935 Reply

    Rishi Sunak is considering plans to charge motorists ‘by-the-mile’ amid concerns over a £40 billion tax shortfall created by the switch to electric ca
    [See the full post at: ‘Pay-by-the-mile’ tax being considered to cover shortfall following switch to EVs]

    #203938 Reply
    Meat-Head
    Participant

    Electric cars cause more damage than good, been mentioned on DK before!

    This was posted earlier in DK SB, wrong utter wrong to a point but write to another.

    Some of us cycle 12 miles a day to/from work.

    Then at weekends do a whopping 20 miles all weekend.

    So yes money terms could see the point, but you will still need to insurance and mot.

    So just pay everything, cost of hire that vehicle/day. Use your vehicle x times
    Hey presto dont feel robbed

    #203999 Reply
    Graham Cox
    Guest

    Is this the same government that told us all to buy A diesel

    #204001 Reply
    Eddie Bamber
    Guest

    When we changed VED to an emissions based system, some cars were £40, £20 or even £0 a year to ‘tax’. That obviously caused a loss of revenue to the Government That changed again in 2018 when all cars are now at leas £165 to tax. In 2018 I bought a 1.0 litre car and was looking forward to cheap road tax so this is how I found out. The Government are not losing out on road tax and never will be if they’re charging ‘per vehicle’ in the future for zero emissions vehicles.

    #204000 Reply
    Bob Elliot
    Guest

    or we could push hydrogen..tax it the same as fossil fuels…use petrol stations to stock the H gas and
    save putting a 10 THOUSAND TONS OF COPPER in the ground for these electric ‘milk floats’…and build a few nuclear-boilers* by the coast to make the stuff…am i being a bit simple..?
    (* a line of old Nuclear Subs lashed together with some 6.3mm cable to local CEGB ‘Sub-Station'(pun..oh yes)..should do it…2.5mm earth should be fine…)

    #204029 Reply
    Meat-Head
    Participant

    Though someone tweeted the hygrogen is from oil!

Viewing 6 posts - 1 through 6 (of 6 total)

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