New pay-per-mile tax for electric cars proposed

A report from a right-wing ‘think tank’ aims to tackle congestion, pollution and the looming ‘black hole’ in government fuel duty revenues 

Motorway driving

Electric cars should be subject to a new pay-per-mile taxation scheme, that would eventually be rolled out to all road users, according to a new report from the Tory ‘think tank’ responsible for formulating many of Maggie Thatcher’s political reforms.

The right wing Centre for Policy Studies says “EV drivers can see the taxman coming for them a mile off”, and claims its focus groups and polls suggest drivers will begrudgingly accept the need for them to make a fair contribution to Treasury coffers.

In a new report called The Future of Driving, the argument is made that road pricing is essential to tackle worsening congestion, limit the environmental harms of pollution, and find a way to replace fuel duty tax revenues that will be lost as drivers transition from petrol and diesel cars to electric power.

The report authors want a ‘pay as you drive’ scheme to ultimately replace fuel duties entirely, but say experience suggests a sudden changeover to road pricing would be likely to cause a political backlash. The proposed solution is to hit EV drivers with the new pay-as-you-drive levy first, then roll it out to other drivers at a later date. To make the system fairer, drivers would be granted a free mileage allowance based on their postcode. Those in remote rural areas would have a higher allowance than drivers in congested urban areas with multiple public transport options.

While the pay-per-mile tax is not being recommended to apply until later this decade, so as not to diminish the appetite of drivers for EVs, the Centre for Policy Studies has already worked out how it thinks the tax should be applied. The report says vehicles would be assigned a per mile tax code according to their weight, reflecting the potential damage heavier vehicles inflict on the roads, and charges should be collected monthly by direct debit based on the distance driven.

“There are a variety of technological options that could be used to implement such a scheme,” the report states, “ranging from submitting your mileage manually, to an on-board device that transmits mileage automatically, or high-tech GPS tracking”. The report authors advise that drivers should be allowed to pick the method they’re comfortable with, and: “Since we are not proposing ‘smart’ charging at a national level, the Government would not need time or location data.”

Responding to the report, RAC head of roads policy Nicholas Lyes said: “As more electric vehicles come on to our roads, revenue from fuel duty and vehicle excise duty will decline, so it’s inevitable a new system will have to be developed.  

Lyes added it’s vital any new system be transparent and fair to drivers of both conventional and electric vehicles, and suggested Ministers should consider ring fencing revenues “not least to finally end the country’s plague of potholes”.

What do you think of the plans for pay-as-you-go charging for motorists? Let us know in the comments...

Current affairs and features editor

Chris covers all aspects of motoring life for Auto Express. Over a long career he has contributed news and car reviews to brands such as Autocar, WhatCar?, PistonHeads, Goodwood and The Motor Trader.

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