Motorists Could Be Charged By The Mile As Tax Receipts Drop
A pay-as-you-go system may be needed to fill the hole left by fuel duty on petrol and diesel cars
UK drivers face being charged by the mile as new changes may be needed to fill the hole left by fuel duty on petrol and diesel cars.
The shift towards electric cars means the tax, which raises £28 billion annually for the Treasury, will need to be replaced.
Chancellor Rishi Sunak may cut fuel duty further during today's (23 March) mini-budget to ease the costs of the living crisis.
But some experts have raised concerns over who will be impacted by the revenue loss, particularly since the government has pushed forward the ban on the sale of new petrol and diesel cars to 2030.
One concept proposed in a recent report from the House of Commons' Transport Committee suggests switching to a pay-as-you-go system.
Per the report: "The Government must set out a range of options to replace fuel duty and vehicle excise duty.
"Those options should be revenue-neutral and not cause drivers, as a whole, to pay more than they do currently.
"One of those options should be a road pricing mechanism that uses telematic technology to charge drivers according to distance driven, factoring in vehicle type and congestion.
"If motoring taxation is linked to road usage, the Committee has not seen a viable alternative to a road pricing system based on telematics."
While the proposal aims to ensure drivers pay close to what they do now while addressing declining tax revenues, there are fears the system may not be fair and could discourage the further adoption of electric vehicles.
In response to the report, AA president Edmund King said: "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 committee also says any new system should totally replace fuel duty and VED whereas we believe a transition period would be required to still encourage the take-up of EVs."
The RAC Foundation's director Steve Gooding added: "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.
"If the Treasury is thinking it can leave this issue for another day but still recoup their losses from EVs, they risk a furious backlash."
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