Chancellor Rachel Reeves is facing a storm of criticism over proposed new pay-per-mile car tax bands, with industry leaders branding the plans "farcical" and warning they could severely damage the UK's electric vehicle transition.
Industry Backlash Against New Tax System
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), delivered a stark warning, describing the proposed 3p per mile charge for electric vehicles as "entirely the wrong measure at the wrong time".
He emphasised that introducing such a complex and costly regime targeting the very vehicles manufacturers are being compelled to sell represents a strategic mistake that could deter consumers and undermine industry's ability to meet ZEV mandate targets.
"There would be significant ramifications for perceptions of the UK as a place to invest," Mr Hawes stated, highlighting the potential damage to Britain's automotive industry.
Mixed Messages on Electric Vehicle Policy
Paul Barker, editor at Auto Express, acknowledged that some form of pay-per-mile scheme was inevitable given the decline in fuel duty revenue, but stressed it could have a disastrous impact on efforts to encourage drivers to switch from petrol and diesel cars.
"Every electric car sold is one fewer that's visiting petrol stations and pumping money into Treasury coffers," Barker explained, noting the fundamental shift in how road usage is taxed.
Premium electric vehicle manufacturer Polestar joined the criticism, with its UK managing director describing the proposals as "farcical" compared to fuel duty rates that have remained frozen since 2011.
He accused the government of sending a confused message, saying: "On one hand recently incentivising the move to zero emission driving with the Electric Car Grant and on the other planning to take this away with tax rises."
Political Fallout and Consumer Impact
Shadow Transport Secretary Richard Holden told GB News that Labour was launching a "tax grab" on motorists already facing massive motoring costs during a cost of living crisis.
He added: "Britain cannot afford a Government that treats motorists as a cash machine to plug the holes in Rachel Reeves' failed economic plans."
The controversy emerges as the government faces balancing the need to replace declining fuel duty revenues with maintaining incentives for drivers to adopt electric vehicles, creating a complex policy challenge with significant implications for both consumers and industry.
