Bringing in the Electric Vehicle Excise Duty (eVED) in 2028 could cost the UK economy up to £4.8 billion under worst-case scenarios, according to UK trade association BEAMA.
The cost would exceed the total revenue from the new tax policy, which is forecast to raise around £4.3 billion by 2031, and is based on BEAMA research revealing EV sales would collapse like in New Zealand when it introduced a pay-per-kilometre tax.
In the latter case, sales went down by more than 50%, and in a similar situation in the UK, HM Treasury would lose £4.8 billion in 2028 and even more in 2029.
Even in a best case scenario, where EVs replace all petrol or diesel powered car purchases, the UK economy would still get a £890 million hit in lost tax receipts and compliant costs in the first year, and £630 million in lost VAT receipts and £260 million in compliance for car leasing companies.
BEAMA, EVA England, ChargeUK and REA are now calling out the fiscal contradictions in the current policy. The coalition – representing EV charging providers, manufacturers, leasing firms, driver groups, investors and insurers – argues that introducing the tax in 2028 will damage consumer confidence, suppress demand and create unworkable conditions for
leasing companies and fleet operators.
The coalition has written to Daniel Tomlinson MP, Exchequer Secretary to the Treasury to highlight how the introduction of this tax in 2028 will also delay planned investments in the charging sector. It is calling on the Government to #Don’tTaxTheTransition.
Matt Adams, Head of Electrical Transport Systems at BEAMA, said:
“Introducing the pay-per-mile policy early is a fiscal own goal. It will slow EV uptake, reduce EV charging investments,
and cost the UK economy more than the treasury stands to raise with the taxation.
“A delay to 2030 would provide essential stability at a critical point in the EV transition. Manufacturers in the EV supply chain need a clear message from government to continue investment into local communities and the wider UK economy.”
Vicky Edmonds, CEO of EVA England, said:
“eVED must be delayed until the Government can prove the proposals work for drivers. The current proposals risk leaving EV owners out of pocket and eroding confidence amongst those thinking about making the switch to electric, particularly lower and middle-income households and those without access to private charging.”
Mark Constable, Head of Transport Policy, REA, said:
“The three pence per mile taxation mechanism will create significant aggravation for drivers. The process is simply not fit for purpose, is certainly not scalable, and also opens the system to fraud and unfairness. Consumers shouldn’t tolerate this form of taxation.”
Jarrod Birch, Head of Policy and Public Affairs, ChargeUK, said:
“The three pence per mile tax is another contradiction at the heart of government’s EV policy which will impact those
who cannot charge at home the hardest. EVs are experiencing a surge of interest as an alternative to rollercoaster petrol prices.
“Government should be doubling down on the transition by making buying and charging an EV affordable for all.”
Image courtesy of Green Car Guide
