The UK government has responded to a proposal advocating for a pay-per-mile driving tax that would require drivers to pay for each mile they drive as a way to address a gap in government finances. Campaign for Better Transport (CBT), a public transport charity, has urged Chancellor Rachel Reeves to consider implementing this system to offset the potential loss of revenue from fuel duties. The suggested plan includes charging zero-emission vehicle (ZEV) drivers, such as electric car owners, based on their mileage, with existing ZEV owners exempt until the new system is in place to encourage the transition to electric vehicles.
Currently, duties on petrol, diesel, and other fuels bring in approximately £25 billion annually to the Treasury, a figure expected to decline as more drivers switch to ZEVs. Despite the financial implications, the concept of introducing per-mile charges, also known as road pricing, has faced resistance from successive governments due to its perceived political sensitivity. Silviya Barrett, CBT’s director of policy and campaigns, emphasised the importance of ensuring ZEV drivers contribute to vehicle taxation fairly and proposed using regular odometer readings to calculate charges, noting public support for such a change.
The RAC echoed the need for a new form of taxation to prevent significant revenue losses and called for a system that is equitable for drivers of both traditional and electric vehicles. In response to the speculation, a Government spokesperson clarified that there are currently no plans to introduce road pricing, underscoring the government’s commitment to supporting the automotive sector in transitioning to electric vehicles to meet climate targets. Despite the ongoing debate surrounding pay-per-mile proposals, discussions on the implementation of such a system continue, with stakeholders advocating for a balanced approach that accounts for the evolving landscape of vehicle technologies and their impact on government revenues.