Earlier this week, the Centre for Policy Studies released its “Future of Driving” report which laid out plans to overhaul the taxation system.
The report suggested that fuel duty and Vehicle Excise Duty (VED) should be scrapped and replaced with a “pay-per-mile” charging system.
It would initially only apply to electric vehicles, with owners of zero emission vehicles would still pay less than petrol and diesel motorists.
As part of such scheme, drivers who live in rural areas to ensure the system is fair, as they need to travel further to access services.
Data from the report claimed that UK drivers paid around £33billion in fuel duty and VED in 2021 and 2022, although the Government only spent a combined £11.8billion on national and local roads in the same period.
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Colin Walker, transport analyst at the Energy and Climate Intelligence Unit, analysed the report and commented on what it would mean for drivers.
He said: “Under a pay-as-you-drive system, EVs will remain significantly cheaper to run than petrol cars.
“If an electric Nissan Leaf driver paid the equivalent fuel duty cost, which is about 5p per mile, of a similar petrol model car like the Nissan Juke, it would still be more than £500 a year cheaper to run.”
The report also suggests that eventually, once the share of EVs on the road grows, the new “per mile” system could completely replace fuel duty and VED for all vehicles.
It is hoped these proposals would future-proof the tax system, which has long been criticised by drivers and experts for being outdated.
Nicholas Lyes, RAC head of roads policy, said it was “inevitable” that a new tax system would be developed to deal with the lowering rates of fuel duty.
RAC research suggested that drivers were broadly supportive of the idea, with more than a third saying the “pay per mile” scheme would be fairer than how it is currently.
However, 75 percent were concerned that the Government could use such a system to increase the amount that motorists were taxed.
Mr Lyes added: “Whatever any new taxation system looks like the most important thing is that it’s simple, transparent and fair to drivers of both conventional and electric vehicles. It’s essential that a new system replaces rather than runs alongside existing taxation regime.
“Ministers should also give serious consideration to ringfencing a sizeable proportion of revenues raised from a new scheme for reinvestment into our road and transport network, not least to finally end the country’s plague of potholes.”
Mr Lyes added: “Whatever any new taxation system looks like the most important thing is that it’s simple, transparent and fair to drivers of both conventional and electric vehicles.
“It’s essential that a new system replaces rather than runs alongside existing taxation regime.
“Ministers should also give serious consideration to ringfencing a sizeable proportion of revenues raised from a new scheme for reinvestment into our road and transport network, not least to finally end the country’s plague of potholes.”
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