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Government could look to road pricing to replace fuel duty as EV sales rise

Government could look to road pricing to replace fuel duty as EV sales rise

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With electric vehicles contributing nothing to fuel duty, the government could look to individual road pricing to keep revenue up

Motoring publication Autocar reported that the government was looking at alternatives, including road pricing, according to a source from think tank Policy Exchange.

Fuel duty is, for most, the largest tax motorists pay – set at 57.95 pence per litre of petrol or diesel fuel purchased. It’s a tax that pure electric vehicles – and to a lesser extent, plug-in hybrids – avoid paying completely.

The Policy Exchange estimated that the uptake of EVs could cost the government up to £170 billion by 2030 in lost fuel duty. Perhaps understandably, the government will look to minimise the impact of this, with a source telling Autocar that road charging was on the table.

Yet the strategy of how to implement this is uncertain. Edmund King, president of the motoring organisation the AA, called road pricing ‘a poll tax on wheels’ and told Autocar it would be ‘political suicide’ for a government to implement it. 

“It’s almost as if no one is addressing this issue,” he said. “We know that duty is going to disappear, but no one is facing up to it.”

He suggests a different strategy, and proposed a scheme called ‘Road Miles’, which had been created with his wife, economist Deirdre King.

Under this proposal, drivers would be given an ‘allowance’ of 3,000 miles per year free of charge. Over that amount, they’d be expected to pay a fee per mile.

Drivers in rural areas and electric vehicle owners would receive more free miles, and the whole scheme would be phased in gradually as fuel duty was phased out. Mileage would likely be tracked by a device plumbed into the car’s diagnostic port or, for older cars, checked at yearly MOT time.

The Kings were shortlisted for the prestigious Wolfson Economics Prize for the proposal.

No solution has been proposed by government yet, but it’s expected to be investigated as sales of fuel drop ever lower due to increasing EV uptake.