Image: DfT
MPs have called for a new motoring tax – in the light of the increasing popularity of electric vehicles – but warn any system must not ‘undermine progress’ towards targets on increased active travel and public transport usage.
In a new report, the Transport Committee recommends the introduction of a road pricing system based on miles travelled and vehicle type.
This would ‘enable the Government to maintain the existing link between motoring taxation and road usage’ – which could come under threat because neither fuel duty nor vehicle excise duty are currently levied on electric vehicles.
The report estimates that without reform, policies to deliver net zero emissions by 2050 will result in zero revenue for the Government from motoring taxation – leading to a potential loss of £35 billion to the Exchequer.
This would impact on roads funding – as well as funding for other areas such as schools and hospitals.
The report concludes by saying drivers of electric vehicles should pay to maintain and use the roads which they drive on, as is currently the case for petrol and diesel drivers.
However it stresses there must remain incentives for motorists to purchase vehicles with cleaner emissions.
Huw Merriman MP, chair of the Transport Committee, said: “It’s time for an honest conversation on motoring taxes.
“The Government’s plans to reach net zero by 2050 are ambitious. Zero emission vehicles are part of that plan.
“However, the resulting loss of two major sources of motor taxation will leave a £35 billion black hole in finances unless the Government acts now – that’s 4% of the entire tax-take.
“Only £7 billion of this goes back to the roads; schools and hospitals could be impacted if motorists don’t continue to pay.
“Innovative technology could deliver a national road-pricing scheme which prices up a journey based on the amount of road, and type of vehicle, used. Just like our current motoring taxes but, by using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives.
“By offering choice, we can deliver for the driver and for the environment. Road pricing should not cost motorists more, overall, or undermine progress on active travel.”
RAC calls for ‘simple and fair’ system
Reacting to the announcement, the RAC says the rise in electric vehicles means it’s ‘inevitable’ a new system will have to be developed.
Nicholas Lyes, RAC head of roads policy, said: “As more electric vehicles come on to our roads, revenue from fuel duty and vehicle excise duty will decline, so it’s inevitable a new system will have to be developed.
“Our research suggests that drivers broadly support the principle of ‘the more you drive, the more tax you should pay’, with nearly half (45%) saying a ‘pay per mile’ system would be fairer than the current regime.
“Whatever any new taxation system looks like, the most important thing is that it’s simple and fair to drivers of both conventional and electric vehicles. Ministers should also consider ringfencing a sizable proportion of revenue for reinvestment into our road and transport network.
“The Treasury needs to get moving on this sooner rather than later.”
2021 was celebrated as ‘the most successful year in history’ for the uptake of electric vehicles, with more new battery electric vehicles (BEVs) registered than over the past five years combined.
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