Campaign for Better Transport calls for tax on EVs
The Campaign for Better Transport has written to the Chancellor of the Exchequer calling on her to tax zero emission vehicles to make up for the decline in fuel duty.
The sustainable transport campaign group said the Exchequer is set to see revenue decline by £5 billion a year by 2033, due to the EV transition, with lack of income from fuel duty from petrol and diesel sales at the pump.
In a letter to the Chancellor Rachel Reeves, the group said a “simple charge” which would be “levied on zero emission vehicles (ZEVs) on a per-mile basis” would be the easiest solution.
It said: “Having an adequate transition period would enable industry to prepare. And exempting existing ZEV drivers would incentivise uptake before the implementation date”, according to the group.
Research by Campaign for Better Transport showed that 65% of the public believe it is fair for ZEV drivers to be taxed but at a lower rate than petrol and diesel drivers versus only 19% who disagree.
It follows plans announced by previous Chancellor Jeremy Hunt to stop EVs from being exempt from Vehicle Excise Duty by April 2025.
Silviya Barrett of Campaign for Better Transport said:
“The new Chancellor faces a looming black hole. She can avoid it, in a way which is fair, and which garners broad public support. But she should start now, as this issue will only get more pressing.”
“It should be cheaper to drive a zero-emission vehicle than a more polluting vehicle, but it’s only fair that these drivers should pay a share, and a pay-as-you-drive model can achieve this,” Ms Barrett said.
ADEPT President, Ann Carruthers, said:
“As we transition to a decarbonised transport system, it’s crucial that we address the funding gap created by declining fuel duty revenues.
“A well designed, pay-as-you-drive system would provide both a sustainable funding source for our vital road infrastructure and also encourage the shift towards greener travel choices that are crucial for our net zero ambitions.”
RAC head of policy Simon Williams said:
“With fuel duty revenue set to fall further as more electric vehicles come on to the road, a replacement form of taxation needs to be introduced to avoid losing billions.
“We believe the Treasury needs to get moving on creating this new system sooner rather than later.”
Alison Edwards, Director of Policy and External Relations at forum member the Confederation of Passenger Transport said:
“Bus and coach operators recognise that for the UK to meet its net zero carbon targets many more people must be persuaded to use public transport more often.
“The introduction of pay-as-you-go vehicle taxation could support this shift by balancing pricing between modes. This would help curb congestion – something that will in turn make buses and coaches quicker, more reliable and so more attractive.”