22 November 2018
The government is forecast to collect £28.2 billion in fuel duty and around £5 billion in road tax this financial year, without even taking into account the VAT charged on fuel, and yet those who drive pure-electric cars contribute zero to that figure. As more people adopt electric vehicles these revenues will clearly reduce, therefore how will these revenues be clawed back in future?
It’s clear than that fuel duty is on its way out, but taxing electricity as a fuel or increasing the VAT on electricity would be incredibly unpopular.
This leaves road pricing. Mileage is already recorded for MOT purposes, therefore it seems entirely logical. It also works on the same principle as fuel duty: drive fewer miles, pay less duty. The problem with road pricing is that it has traditionally proven to be incredibly unpopular. Fuel duty is unpopular enough, which is partly why the government has frozen it at 57.95 pence per litre since 2011.
It seems certain mileage will either be tracked via a device attached to your car’s diagnostics port, similar to an insurance black box, or recorded at MOT time for older cars which will clearly necessitate a much tougher approach to clocking.
Many will still dislike of road pricing but it will look a whole lot fairer as the proportion of electric vehicle owners increases and they continue avoid what is, for the rest of us, the largest motoring tax we’re subjected to.
If this blog raises any issues that you wish to explore further, please do not hesitate to contact me or a specialist in our automotive team.
