Car tax changes: New ‘electric tax’ charge is needed urgently to ‘save the economy’

Martin Lewis gives money-saving advice on VED car tax

Car tax updates are being considered which could see a pay per mile system introduced in place of existing Vehicle Excise Duty and fuel duty charges. Under current measures, zero-emission vehicles are exempt from road tax charges and do not contribute towards fuel duty costs as they do not buy petrol or diesel.

Tax exemptions are one of the major incentives for motorists to purchase an electric vehicle due to the major savings drivers can make.

However, there is yet to be a decision made on whether electric cars would be charged under a pay per mile approach.

Speaking exclusively to, Mr Freeman warned a new “electric tax” was needed as there was no reason why some owners shouldn’t pay to use the roads.

He demanded road users should be charged “at the point of entry” to ensure all drivers were contributing equally to the road.

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He told “My solution is really very simple and that is charge motorists at the point of entry as they are currently charged now.

“You can introduce an electric tax so that in 2030 when by and large there aren’t going to be many combustion cars sold.

“You continue with the fuel duty until there are no more [petrol and diesel] cars.

“At the same time you charge an electric duty for the people who use electric cars to pay tax.

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“Why shouldn’t they, the whole idea is to save the economy that’s why we are doing it.

“An electric tax means we all contribute equally to the Exchequer.”

The Department for Transport has said they are committed to achieving zero-emissions by 2050 and transition towards electric vehicles.

The DfT added as the UK moves towards the transition, it is important to ensure motoring taxes keep pace with the change on the roads.

They said any changes to the tax system will be considered by the Chancellor with further steps taken in due course.

Dan Martin, CEO of Elmtronics said electric car owners understand long term exemption was “not sustainable”.

However, he added it was important schemes did not detriment EV ownership and should not be introduced before petrol and diesel uptake has been reduced.

Speaking to “The current system we have which basically says you pay a tax in relation to the amount of fuel you use.

“Why should it make any difference whether its diesel, whether its petrol or whether its electricity.

“That represents the fuel you use, that represents your proportion of usage.

“If you do more mileage you’re going to have to buy more electricity, more petrol or more diesel and you’re going to need to pay more tax.

“I don’t think there’s anything wrong with that, I think that’s fair. It’s workable and there’s no strategy about it.”

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