Industry groups have responded to reports that have claimed the Autumn Budget could include a new pay-per-mile charge for electric vehicles (EV).
The associations, including the AA and EVA England, have stating concerns about the new tax move comes during a critical time for the transition from ICE vehicles to EVs, and with the Government struggling to hit its ZEV Mandate.
According to the Daily Telegraph, the conversation on the potential levy would see EV drivers charged 3p-per-mile on top of other road taxes. As an example, this would add around £12 onto a journey from London to Edinburgh. It also stated that hybrid vehicles would also be charged in such a scheme, but at a lower rate.
In terms of payment, it would operate in a similar way to car insurance and leasing deals, with drivers having to estimate their annual mileage and pay the tax upfront – receiving credit if under the estimation and a ‘top-up’ charge if drivers are in excess of their predicted usage.
It follows long-running concern about the movement away from fuel duty as the UK transitions away from petrol and diesel vehicles, with a shortfall in revenue to the Exchequer.
According to the Office for Budget Responsibility (OBR), fuel duty is expected to fall to just 2% by 2025/26 having once been almost 7% in 20219/2020.
In addition, there has been a fuel duty freeze for a decade, which has cost the Exchequer around £100bn in lost revenue, and, if duty had risen in line with RPI, it would provide an extra £17.4bn a year to HM Treasury’s coffers.
A government spokesperson told the BBC said that there was “no equivalent” to fuel duty for EVs and that it wants to produce a “fairer system” for drivers.
The move would be the second such intervention by the UK Government, following the April budget’s axing of vehicle excise duty for EVs.
However, the government was still backing the transition away from petrol and diesel, they said, pointing to £4bn in support already given, including grants to cut upfront costs by up to £3,750 per eligible vehicle.
Vicky Edmonds, CEO of EVA England, said:
‘This is the wrong time to bring in further costs for EV drivers.
“Our survey data shows that at least half of drivers are still finding the upfront purchase costs of these vehicles to be too high, and that half of EV drivers without driveways are finding their vehicles more expensive to run than their former petrol and diesel cars.
“These challenges to switching to electric must be addressed urgently, and before any scheme that suggests additional costs is considered.”
Edmund King, AA president, told the BBC it should “tread carefully unless their actions slow down the transition to EVs”.
King added that the UK Government’s ZEV Mandate may not be met this year, and said the proposal needed to “to ascertain whether these new taxes will be equitable or a poll tax on wheels”.
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