Concerns grow over EV pay-per-mile tax

It could mean EV drivers pay 3p a mile in addition to other road taxes as a way to offset plummeting revenues from diesel and petrol vehicles as drivers switch to carbon zero options.

However, the SMMT said that while a new approach to motoring taxes was required, introducing a pay-per-mile tax now would be “entirely the wrong measure at the wrong time”.

The motoring group said: “Introducing such a complex, costly regime that targets the very vehicles manufacturers are challenged to sell would be a strategic mistake – deterring consumers and further undermining industry’s ability to meet ZEV mandate targets, with significant ramifications for perceptions of the UK as a place to invest.

“A smarter, fair and future-ready taxation system requires a fundamental rethink – one that must be done in full partnership with the industry and other stakeholders.”

Polls suggest the public tends to support the idea; a YouGov survey out yesterday (6 November) found 43% either ‘strongly support’ or ‘somewhat support’ the idea, while 34% either ‘somewhat oppose’ or ‘strongly oppose’ it. Older people are more likely to favour an EV road tax than younger people.

James Court, head of policy at Octopus Electric Vehicles, said EV drivers should pay, but only at the right level and at the right time: “Now would be far too soon - EVs represent only 4% of cars on our roads and a tax would raise a minimal amount until this number is bigger,” he said.

“As we’ve seen in other countries, introducing a charge now would stifle the growth we’ve seen over the past years, and be self-defeating.

“What is needed is a considered plan for the best and fairest way for all road users to handle the change in vehicle mix over time.”

Meanwhile, polling conducted by the RHA found widespread public concern about the impact of any fuel duty increase on household budgets.

More than 80% of those polled believed a fuel duty rise would push up the cost of essentials such as food and medicine.

Eight in ten people polled also thought fuel duty should either stay the same or be reduced.

The RHA said its findings supported its pre-Budget research highlighting that a 5p fuel duty increase would impact the wider economy and remove almost £2bn from UK household budgets every year, totalling £7bn between now and 2029.

RHA MD Richard Smith said: “These new polling results confirm what we’ve been hearing as we travel the country. People understand that when transport costs rise, the prices of everyday essentials are hit hardest, with lower-income households feeling the impact most acutely.

“Many business and household budgets are stretched to breaking point, and it’s clear many share our concerns. We repeat our call on the Chancellor to keep the freeze on fuel duty.”