EV drivers should pay-per-mile and/or per-kilo, say reports

Two different think tanks have cited a pay-per-mile road pricing model as a solution to an emerging giant deficit in the public coffers. The Resolution Foundation and the Centre for Policy Studies want to target electric car (EV) drivers with new tax burdens on a per-kilo and per-mile basis.

The recently published Centre for Policy Studies report, entitled The Future of Driving, proposes drivers paying on a monthly basis, either submitting their own mileage manually or automatically using a high-tech solution like GPS.

The CPS's report also proposes a ‘free mileage allowance based on postcodes’ which would be higher for drivers in rural areas. That means at least you wouldn’t be penalised for popping about town.

The Resolution Foundation’s report, Where Rubber Meets Road, suggests a per-kilo priced model for EV road tax. The increased weight of electric vehicles is cited as a factor advancing damage on roads and multi-storey car parks. It also suggests doing away with the daily Congestion Charge.

Both recommend implementing any changes to motoring taxation later in the decade, giving us all a chance to get savvy about the new approach.

Right now, EV drivers don’t have to pay road tax (VED) (they'll be liable from 2025, though). EVs aren’t liable for the 52.95 pence-per-litre duty on fuel either. And that's the big one: fuel duty currently accounts for £25 billion of the Treasury’s revenues, suggesting future fiscal potholes will – metaphorically speaking – be as deep as the chasm-like ones we're physically driving around today.

Calculations suggest when EVs account for 25 per cent of cars on UK roads, there’ll be a Treasury deficit of a not-so-insignificant £9 billion. Currently, EVs account for 16.6 per cent of the UK’s cars, according to 2022 new registrations provided by the DVLA and SMMT data.

In response to a letter sent to the Chancellor in December 2022, Jeremy Hunt replied “the government will need to ensure that the tax system encourages the uptake of EVs", while confirming that road pricing wasn’t being considered… at least not yet.

Chris Green, CEO of digital garage platform Regit, said: “A pay-per-mile scheme could well end up being the fairest way to charge road tax but as with most proposals, any kind of substance at this stage is lacking and ultimately uncertainty with regards to zero-emission road taxation just adds doubt in consumers minds and acts as a further barrier to EV adoption.

"What is clear is that there needs to be a long and thorough and well-publicised consultation period so that many motorists can register their concerns and that the changes are implemented in steps."