The rise of the electric vehicle (EV) is creating change in the environment and forcing change in government policy.
The rapid increase in sales of EVs is bringing down CO2 emissions of new cars in UK to lowest level ever, but, with the shift to EVs set to result in a fuel tax shortfall, MPs are asking the Government to develop a national road pricing scheme as a matter of urgency.
The carbon dioxide emissions of new cars sold in the UK dropped to the lowest level ever in 2021 thanks to the unprecedented surge in electric vehicle sales, industry data from to the Society of Motor Manufacturers and Traders (SMMT)
This is obviously good news but with more EVs being driven, fuel tax is decreasing. The government collects approximately £28bn annually in fuel duty paid on petrol and diesel, a tax that does not apply to pure EV drivers.
In a report published this week, the House of Commons’ Transport Select Committee said it sees “no viable alternative” to a national road pricing scheme, under which motorists would pay for road development and maintenance using a different mechanism to the current approach, under which funding is raised through fuel duty and vehicle excise duty.
Committee chair Huw Merriman said: “This issue can’t be dodged. We have to change policy.”
MPs on the Committee are recommending that the Treasury and the Department for Transport (DfT) jointly establish an “arms length body” to draw up options for the new scheme by the end of 2022. The report says that at least one of the options should be a road pricing mechanism that uses ‘telematic technology’ to charge drivers according to distance driven. Essentially a pay-per-mile charge.
Responding to the report, the RAC Foundation’s director Steve Gooding said: “Drivers choosing to go electric deserve to know what is coming next – particularly if the promise of cheap per-mile running costs is set to be undermined by a future tax change.”
AA president Edmund V King OBE added: “Whilst our polls show many drivers accept the principle of ’pay as you go’, they don’t trust politicians to deliver a fair system.
“Hence we agree with the Committee that any new taxation proposals should be put forward by a body at arm’s length to the Government and any new scheme should be revenue neutral, and we believe the charges should be set independently.”
The Government now has two months to respond to the report.
Progress with EV technology is forcing change but as Merriman says “New taxes, which rely on new technology, take years to introduce.”The report can be found here.
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