ELECTRIC CARS TO PAY 6P PER MILE UNDER 'VITAL' NEW CAR TAX PLANS TO EASE TRAFFIC
It is estimated that by the early 2030s, annual receipts from fuel duty are expected to fall by £10billion, with the switch to electric cars becoming more common, according to the Resolution Foundation.
From 2030, the UK will ban the sale of new petrol and diesel vehicles, resulting in a greater number of people not buying fuel, thus slashing profits from fuel duty.
The "Where the rubber hits the road" report proposed charging electric vehicles based on a "pay-per-mile" system and facilitation of local congestion charges.
A national "road duty" would be introduced, and would charge electric cars six pence per mile (plus VAT) for a typical EV.
The report claims this would be easy to understand and act as a like-for-like replacement of fuel duty, while maintaining a consistent revenue stream for the Government.
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Another proposal deals with reforms for the system of Vehicle Excise Duty (VED), suggesting that new cars could be taxed based on their weight.
VED brings in around £8billion per year, with electric cars being exempt from the charge until 2025, at which point they will pay less than the most polluting petrol and diesel vehicles.
Although more people are buying cars which release fewer emissions, there has been an uptick in the number of larger vehicles purchased. In 2022, 14 percent of cars weighed more than two tonnes.
The report states: "A charge of £7.50 per kg for cars above 1,600kg or £14 per kg for those above 1,800kg, along with (temporarily) slightly higher limits for EVs to account for additional battery weights, would match current upfront VED revenues.
"On current trends, the buyers of most normal cars would incur comparable or lower charges - only 29 percent of new vehicles would be taxed at all if the weight minimum was set at 1,600kg, or 19 percent if 1,800kg was the cut-off."
Cllr Linda Taylor, Transport spokesperson for the Local Government Association, responded to the plans, saying: "This report rightly highlights the urgency that is required to develop a workable alternative to fuel duty for electric vehicles.
"Whilst councils are working hard to support the transition to zero-emission vehicles, it is vital that we avoid a huge increase in traffic levels on our local roads, which according to official statistics, could be 54 percent higher by 2060.
"There are already eight million more cars on our roads since the turn of the century, which brings huge pressures locally on congestion, our air quality and demand for parking spaces.
"It is important that the Government takes steps to mitigate against this and help ensure that public transport and active travel remain attractive and affordable options."
The report also pointed to cutting VAT on public chargers, which has long been called for by electric car advocates and organisations.
Currently, people who can charge their EVs at home are charged a rate of five percent VAT, compared to a staggering 20 percent for public chargers.
This penalises those who do not have access to a charger at home, with the report calling for the so-called "pavement tax" should be outlawed.
Commenting on the report, Paul Hollick, chair of the Association for Fleet Professionals, said: "The main point that we would make in response is that it is very much too early, given the current situation regarding electric car and van adoption, to be implementing these kinds of charges yet.
"In our view, they should take effect around the end of the decade, in line with the 2030 EV new car production deadline.
"Really, what we would like to see is a detailed and informed dialogue lead by the Treasury on this subject, with input from many different parties, that results in a shift towards road pricing over time, with rates set to take effect over a number of years."