Government Considers New Road Tax for Electric Vehicles
The UK Government has confirmed it is actively working to create a fair vehicle tax system for all motorists, with a particular focus on how to charge drivers of electric vehicles (EVs). This comes amidst widespread speculation that a new pay-per-mile scheme could be introduced specifically for EVs.
The Fuel Duty Dilemma and a Multi-Billion Pound Support Package
Currently, owners of petrol and diesel cars contribute to road maintenance through fuel duty, a revenue stream that is absent for electric vehicle owners. As the transition to EVs accelerates, governments globally, including the UK, face a significant drop in income from this duty, necessitating new ways to fund vital infrastructure.
Transport Secretary Heidi Alexander addressed the issue on the BBC's Sunday with Laura Kuenssberg programme. When asked if the government planned to make driving an electric vehicle more expensive in the upcoming Budget, she declined to pre-empt the Chancellor's announcement but outlined the government's dual approach.
"As we make the transition to EVs, two things can be true at the same time," Alexander stated. "We need a fair vehicle tax system for all motorists because EVs, like drivers of petrol and diesel cars, are driving on roads that require maintenance." She emphasised the challenge of maintaining ageing infrastructure, including motorways built in the 1960s and 1970s.
This discussion on potential new charges for EV drivers comes at the same time as the government is bolstering support for their uptake. It was recently reported that Chancellor Rachel Reeves will add £1.3 billion to a grant scheme in Wednesday's Budget, which could cut the upfront cost of a new electric car by up to £3,750.
Industry Reaction and the Challenge of a Fair System
The prospect of a pay-per-mile charge has already drawn criticism from motoring experts. Paul Barker of Auto Express magazine highlighted a key concern, stating: "It wouldn’t be reasonable to charge drivers for mileage clocked up abroad when they’re not using UK roads or infrastructure, so getting the balance right will be vital to any sort of acceptance by motorists."
This follows a report by the Telegraph earlier this month which suggested EV drivers might be charged for all miles driven, including those overseas. In response to the growing debate, a Treasury spokesperson reinforced the government's position, saying: "Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable."
The government therefore faces a delicate balancing act: designing a new tax system that is perceived as fair by all road users while ensuring it does not discourage the vital transition to cleaner electric vehicles.
