The UK government is considering a fundamental shake-up of vehicle taxation, with plans for a new pay-per-mile system specifically targeting electric cars. Chancellor Rachel Reeves is reportedly examining the introduction of a 3p pay-per-mile car tax rate under a proposed 'VED+' system.
Overwhelming Public Support for EV Taxation
New research reveals that a significant majority of the British public believes the time has come for electric vehicle owners to contribute to road funding. A survey conducted by Stonehaven, which polled 2,249 UK adults, found that 71 per cent of respondents think EV drivers should pay at least some tax for their motoring.
In contrast, only a small minority, 14 per cent, believe electric car owners should pay nothing at all. This public sentiment appears to be driven by a desire for fairness, as drivers of petrol and diesel cars currently pay an average of £600 a year in fuel duty, a contribution that EV drivers entirely avoid.
How the New VED+ System Would Work
Under the proposed overhaul, the current system of Vehicle Excise Duty (VED) would be replaced or supplemented by the new 'VED+' framework. This would require EV drivers to estimate their annual mileage and pay a tax amount directly linked to that figure.
The government is framing the move as one of essential fairness. A Government spokesman stated: "Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles."
A Whitehall source emphasised the need for balance, telling The Telegraph: "We recognise people aren’t going to buy EVs if it isn’t easy and convenient and cost-effective. We need to think quite carefully about how we balance whatever is about to happen with the other side of the scales."
Industry Reaction and Spending Priorities
The proposed tax has received a mixed response from industry bodies and manufacturers. The Society of Motor Manufacturers and Traders (SMMT) expressed significant concern, stating: "We recognise the need for a new approach to motoring taxes but at such a pivotal moment in the UK’s EV transition, this would be entirely the wrong measure at the wrong time."
Volvo Cars' chief executive, Håkan Samuelsson, was more direct in his criticism, telling the Financial Times: "That is definitely bad. Don’t go from incentivising something and pushing it with legislation to start to put on penalties and tax on top of a positive development."
The research also revealed strong public opinion on how the new EV tax revenue should be spent:
- Six in 10 surveyed would back an EV tax dedicated to enhancing charging infrastructure.
- Support rose to over eight in 10 if the proceeds were allocated to repairing potholes.
- 47 per cent of respondents think EV taxes should go towards reducing public charging fees.
- Only 16 per cent opposed this use of the funds.
The debate highlights the challenging balance the government must strike between ensuring a fair tax system for all road users and not discouraging the vital transition to cleaner electric vehicles.
