Fuel duty is never a popular topic, but with the inevitable switchover to electric vehicles (EVs), this long-loathed tax is on its way out, together with the billions of pounds of revenue it generates for the government coffers.
Estimates say the Treasury will earn £28.3bn from fuel duty this financial year and the leading UK think tank and educational charity, Policy Exchange, told Autocar magazine they estimated the move to electric vehicles may cost the government up to £170billion by 2030 in lost taxation.
With this in mind, ministers are considering how to replace this huge financial shortfall and the answer might take the form of road pricing. If MPs go ahead with this scheme, UK drivers will face paying for every mile they drive.
Plugging the gap
In early October, Prime Minister Theresa May promised fuel duty would stay frozen for the ninth year in a row, at 57.95 pence per litre of petrol or diesel purchased. While good news for motorists, it’s still galling to know 44% of what we pay at the pumps is the fuel duty, which may account for why fuel duty is so unpopular. This isn’t an issue for pure electric vehicle owners who avoid paying any fuel duty—something very appealing when fuel prices are so high.
To reduce air pollution, or receive large fines, the government is keen to reduce emissions, by getting all UK motorists—over 30 million of us—to switch to greener cars. Only last week we wrote about the impending ban on the sale of petrol and diesel cars.
Not to mention factors such as Oxford City Council considering a ban on all non-zero emissions cars from the city centre, other cities considering charges for petrol and diesel vehicles, and the European Parliament ruling that manufacturers’ must reduce fleet average CO2 emissions for new cars 35% by 2030.
So, how will the government claw back the money lost from fuel duty revenue from petrol and diesel when drivers change to less-polluting hybrid and electric vehicles?
According to Policy Exchange, officials are looking into introducing road pricing to plug the gap, meaning drivers may have to pay to use major routes—even if their vehicles produce zero emissions—which may not go down too well with car owners who feel penalised at every turn.
‘Poll tax on wheels’
There hasn’t been a proposed solution by the government yet, but it’s no doubt on their agenda as the sale of fuel drops with increased EV sales. Josh Burke, Senior Research Fellow for Policy Exchange, told Autocar that a Treasury official had mentioned to him that the government was looking at alternatives to Fuel Duty—one of them being road pricing.
“If anything, the case for reform has accelerated because of the increased uptake of plug-ins,” said Burke.
AA President, Edmund King OBE who, in an interview with Autocar, said: “Road pricing gets described as a poll tax on wheels. It’s political suicide.” Instead, he and his wife, economist Deirdre King propose an alternative scheme they created together, called ‘Road Miles’.
The scheme would give motorists an ‘allowance’ of 3,000 free miles each year, with a charge for every later mile. Motorists living in rural areas and electric vehicle owners would receive more free miles, with a gradual phase-in of the scheme as fuel duty disappears. Just as road pricing would need, for King’s scheme to work, a record of miles travelled is almost certain to come from a device connected to the car’s diagnostic port (much like an insurance telematics ‘black box’) or, for older cars, checked as part of the MOT. Yet, the latter would have to involve a much tighter crackdown on odometer tampering, known as ‘clocking’. This alternative to road pricing may not appeal to all, but last year, King and his wife made the shortlist for the esteemed Wolfson Economics Prize for their Road Miles proposal.
Big Brother is watching you
It‘s a given that fuel duty will disappear and while it would be difficult to apply something similar for electric cars; we have no way of knowing if—while looking at alternatives to keep tax revenue at the current levels—the government won’t bring in a tax on electricity used to charge zero-emission cars.
The possibility of road pricing has always proven to be unpopular. So unpopular that, in 2007, despite no firm proposals being put forward for road pricing, almost two million people signed a Downing Street petition against a national road pricing plan. If the government decide on road pricing as the answer, they could face a fierce backlash from the public. There were also worries from drivers about privacy issues from tracking devices being fitted to cars, which no doubt will resurface if road pricing takes over fuel duty.
In the past, the government said they wouldn’t use the mileage device to keep watch on drivers or to prosecute those found speeding, but who can say future laws won’t change to include such monitoring of driver behaviours?
If, or when, road pricing starts, we’ll know more about more complicated details, such as how will those motorists who, for instance, take their cars on driving holidays across Europe, receive reliable and fair charges only for the mileage clocked up on UK roads? While we wait to see what the future holds for fuel duty, EV drivers, at least, can continue to enjoy no longer having it as part of their motoring costs.
Do you think road pricing is a good replacement for fuel duty? What about the Road Miles idea? Do you have any concerns about having telematics fitted to your car? What alternatives to fuel duty would you support? Tell us in the comments.