The Chancellor is said to be planning to charge electric vehicle drivers 3p per mile in duty, in a bid to get back some cash lost to the Treasury because fuel duty is not levied on EVs.
The Telegraph says that under current plans to be announced by the Chancellor in the budget, drivers of electric cars will be charged on top of other road taxes.
The system will not involve technology, but will have people estimate their mileage and pay alongside their road tax, with any overpayment carried forward to the next year, while underpayment would then be settled.
The report says this will cost the average driver around £300 and that ministers will frame the move as one of fairness, as drivers of petrol cars currently pay £600 a year on average in fuel duty. It adds they will also argue that it is different from traditional pay-per-mile schemes, with a fee taken each year on estimated travel and no mass electronic monitoring of movements.
It says this will be introduced in 2028 after a consultation.
Steve Gooding, Director of the RAC Foundation reacted by telling Highways News: “Whether the source of this story is pre-budget kite flying or pure speculation (the long list of measures any Chancellor is invited to “think about” runs to many pages) the effect will be to start the long-anticipated and inevitable debate on what the future of motoring taxation should be in a world where, as a matter of Government policy, the era of oil-powered motoring is coming to an end, and with it the end of the fuel duty cash-cow that has helped balance the Treasury books for so many years.
“If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but not stall EV take-up and the Government’s carbon reduction strategy in doing so then she needs, in parallel, to address how to cut the cost of public charging for the millions of people who don’t have the option to charge their cars at home. The price gap per KWh could be narrowed a little by changing the VAT treatment, but something more fundamental would be needed to make a material difference.
“Any change to one element of motoring taxation needs to be looked at in the context of the wider package which could, for example, include changes to vehicle excise duty and the year one ‘showroom tax’.
“Meantime before the advocates of time-distance-place road pricing start getting excited our advice to the Treasury on any change to motoring taxes remains: keep it simple!”
UK Sales Director for tolling company Kapsch, Tim Wray, told Highways News: “The issue around a flat pence-per-mile charge is that it carries over all of the same problems that fuel duty has, in terms of not enabling policy makers to influence behaviours. When this issue was first looked at 20 years ago, affordable technology to manage dynamic pricing did not exist, but it definitely does now.”
Another industry professional, who preferred not to be named, commented: “If true, I think Mrs Reeves is gifting Reform UK a political scoring point, because this solution does not affect foreign registered vehicles using UK roads, unlike the charging schemes used throughout Europe.”
(Picture – Yay Images)
