According to a new report from the Government, motorists should be taxed based on miles travelled as the use of petrol and diesel vehicles decreases. The Treasury said tax revenues would keep pace with changes prompted by the take-up of electric cars.
Under the current system of fuel duty and vehicle excise duty, that policy will reduce tax revenues obtained from motoring to zero over the next 20 years, since EVs don’t pay either.
The Government said “radical reform” was needed otherwise there would be no revenue from motoring taxation once net zero is reached in 2050, and potentially even before in 2040.
The MPs involved in the Road Pricing report said that new car tax charges should be based on how much they drive, using technology to track cars’ movements, should be considered.
Such a scheme could factor in the type of vehicle and congestion, and support vulnerable groups such as those with mobility issues, and people in remote areas, the committee said.
READ MORE: Boris Johnson attacks new car tax changes branding them ‘disastrous’
Huw Merriman MP, the chair of the Transport Committee, said the Government needed to act to remedy the loss of two major sources of taxation, VED and fuel duty.
He said the £35billion black hole is four percent of the entire tax-take, adding that: “Only £7billion of this goes back to the roads.
“Schools and hospitals could be [hit] if motorists don’t continue to pay.
“By using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives.”
Toby Poston, BVRLA Director of Corporate Affairs, gave evidence to the Committee in October and welcomed the call for urgent progress to be made.
However, the Association has reinforced the need for immediate improvement in the systems that will make any new road pricing solution a success.
Mr Poston added: “Road pricing involves a total rethink about the way we tax motorists and incentivise transport behaviour.
“It is a controversial topic, and one that successive Governments have chosen to avoid.
“Rapid transport decarbonisation and the 2035 ‘Phase Out’ means that policymakers have to get off the fence and start providing a roadmap for the future of motoring taxation.
“BVRLA members have set out their road pricing principles, and we are delighted that the Transport Select Committee agrees with so many of them, particularly the need to make any system revenue neutral and think about the needs of essential road users.
“Like the Committee, we think the work should start now and the fleet sector is ready to help explore the technologies and policies that will deliver an efficient and effective road pricing system.
“A key role in the implementation of the required technologies sits with multiple Government agencies.
“We need to see them working in close collaboration, receiving additional support in order to meet the challenges of this monumental shift.”
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