New AutoMotive submits Budget proposal
Government should rule out pay-per-mile pricing, restructure road tax, cut public chargepoint VAT and only “gently” increase fuel duty, a new report has said.
The study by New AutoMotive, called Vehicle taxation: the next 25 years, concludes that radical tax reform is unnecessary to support the transition to cleaner transport.
It sets out a “comprehensive” taxation strategy for EVs, including reforming road tax on an efficiency basis rather than a flat rate, meaning less efficient vehicles are charged more. This would ensure EVs pay a fair rate, with the most efficient EVs paying the least.
The report, which has been submitted to the Treasury as New AutoMotive’s representation to the Autumn Budget 2024, also calls on the government to make a VAT cut on public charging, paid for by gradual increases in road tax. It also asks for modest increases in fuel duty, to ensure ICE vehicles continue to pay for emissions.
Finally, it calls for the government to rule out pay-per-mile road pricing, based on the experience of New Zealand and Iceland, and which could stall EV take up as both those countries saw a sales slump after such rules came into force.
To illustrate the issues, under the previous administration’s plans, drivers of cleaner cars will soon be paying up to 10 times more than owners of older, more polluting petrol and diesel vehicles.
Ben Nelmes, CEO of New AutoMotive, said:
“It’s wrong to think that the transition to cleaner transport will take the public finances over a ‘cliff edge’.
“Electric cars aren’t a sin to be taxed but a boon for the economy. Our recommendations suggest a way forward for the Chancellor that is simple and would avoid the kind of bad outcomes seen in other countries that introduce pay-per-mile charging on electric cars.
“Our recommendations would avoid the creation of an electric car tax penalty that is currently due to come into force in April 2025, and which may prevent more people from accessing the benefits of getting a used electric car. EVs can be good for motorists and the taxman – a win-win for people and the planet.”
Image of report courtesy of New AutoMotive
