Car tax plans to charge electric vehicles 6p per mile are ‘ludicrous’

Earlier this week, the Resolution Foundation published a report looking at ways the UK could future-proof motoring taxation and prepare for a future without fuel duty.

As the UK creeps closer to the 2030 deadline for the sale of new petrol and diesel vehicles, the amount of money being spent on fuel will drop, as will revenue from fuel duty.

This shortfall could cost the Government billions of pounds every year, with some estimates showing it could be as much as £35billion.

As part of the “Where the rubber hits the road” report, it was suggested that electric vehicles could pay a “road duty” tax of around six pence per mile (plus VAT).

This could depend on having the annual mileage checked during an MOT, or having a built-in monitoring system to determine how far has been driven.

Many experts have commented on the report, highlighting the need for the Government to replace revenue lost from fuel duty in an electric-dominated era.

Thom Groot, CEO of The Electric Car Scheme, criticised the plans, saying it is counter-intuitive for any EV-focused car tax to be introduced.

He said: “Electric cars use the roads and contribute to wear and tear just like older cars, so it makes sense that drivers should pay for some of their upkeep – which they will from 2025 onwards through the updated road tax.

“Imposing a 6p/mile charge on electric cars just to fill a potential gap in a balance sheet would be a ludicrous case of the Government cutting off its nose to spite its face.

“Electric car adoption is on the rise – but they still represent roughly one percent of cars on the road.

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“Any gap in fuel duty can squarely be placed on the Government’s decision to freeze it for the last decade.”

The report stated that urgency was required to introduce new legislation as electric vehicles will avoid paying Vehicle Excise Duty (VED) until 2015.

It added that a growing number of “richer EV drivers not paying tax” will result in poorer households bearing the brunt of the nation’s transportation taxes and costs.

Forecasts show that by 2027, one in six miles driven in the UK will be with an electric vehicle, resulting in a loss of £3billion in fuel duty.

Mr Groot added: “Furthermore, we need to do all we can to drive EV adoption, both for the good of the planet and for the Government’s balance sheet. 

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“Fossil fuel cars cost the NHS billions of pounds a year and the potential damage of climate change to the Government’s finances are incalculable. 

“So why on earth would we work to discourage people from making the right decision and going electric?”

The report also called on the Government to remove the “pavement tax” to help drivers who do not have access to households to save on charging costs.

Public chargers attract a VAT rate of 20 percent, compared to five percent for home EV chargers, potentially putting a number of drivers off from switching.

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