A new report has proposed a ‘pay-as-you-drive’ model for electric vehicles, to replace the revenues lost from fuel duty and road tax.
‘The Future of Driving’ was published by the think tank the Centre for Policy Studies, and recommends that zero emission vehicles (ZEVs) are charged a flat fee for every mile they drive. Owners of ZEVs currently do not pay vehicle excise duty, although this is set to change in 2025.
The report suggests that drivers are given a set amount of tax free miles per year, with higher allocations for people living in remote areas with fewer transport alternatives. Each vehicle would be assigned a per mile rate, based on its weight to reflect wear on the roads, and charges would be collected monthly by direct debit. The per mile charging system could in time replace vehicle excise duty and fuel duty for all types of vehicle.
A range of reporting models have been suggested, from the lowest tech option of drivers manually logging their miles, to GPS tracking. To allay concerns over privacy, the report suggests that drivers could choose which option best suits them. There could also be concessions under the system for people on low incomes or with disabilities.
Tom Clougherty, research director at the Centre for Policy Studies and co-author of the report, believes that the days of motorists being a cash cow for Government are numbered.
“We shouldn’t replicate the old, punitive tax system, but it is still important that all drivers pay a fair amount for the roads they use,” Mr Clougherty said. “The ‘pay-as-you-drive’ approach our report recommends would meet that objective and could be phased in gradually over the next decade or so – alongside targeted, local initiatives to manage congestion and reduce air pollution.”
“Whatever any new taxation system looks like the most important thing is that it’s simple, transparent and fair to drivers of both conventional and electric vehicles”, said Nicholas Lye, head of roads policy at the RAC.
