A new pay-per-mile charge for electric vehicles from 2028 is in discussion. There’s currently no fuel duty equivalent for electric vehicles, so the potential move is being described as part of creating a ‘fairer system for all drivers’.
Dr Craig Morton, a Senior Lecturer in Transport Planning at Loughborough University, comments on why the introduction of such a tax has always been inevitable, but has the potential to make our transition to greener vehicles harder.
“The introduction of some form of fuel duty on electric vehicles is not a matter of if but when. The government needs to protect the stream of tax revenue which stems from fuel duty, and the move away from liquid fuels to electricity in cars is a clear challenge to this.
“The introduction of fuel duty to electric vehicles will inevitably slow down their diffusion through the car fleet. Operating costs are one of the most important considerations for car buyers, and some EV drivers are currently paying 3p per mile to drive, so introducing a 3p fuel duty could effectively double the cost of their journeys.”
In connection to the rising cost of running an EV, Dr Morton explains that the government will have to think carefully about how they implement the tax, to ensure that electric vehicles are still accessible to all.
“Electric vehicles are also not fully accessible to low-income households, due to high price points and upfront costs, and disproportionate levels of subsidy support.
“The introduction of an additional levy is likely to only make this divide even greater. An option would be to limit any new policy charges to wealthier households, where the cost of a fuel duty could be more easily absorbed.”
Dr Morton also highlights that the government will need to carefully consider the application of the tax, to ensure it is simple for drivers to adopt, but robust to driver evasion.
“The process for introducing a tax charge on electric vehicles is an important dimension. Having drivers forecast their likely mileage for the year could lead to underreporting. An alternative option could be to require that this information is collected during periodic vehicle inspections, such as an MOT test, and reported to the Treasury who then supply a tax bill based on miles travelled.”
ENDS
For further comments or interview requests with Dr Craig Morton, please contact the PR team on publicrelations@lboro.ac.uk or call 01509 222224.