GB News guests debate using electric cars
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According to sources familiar with the situation, the Chancellor is considering “dipping a toe in the water” by applying car tax to EVs. Last year, the Treasury warned that new sources of revenue would be needed as more electric vehicles hit UK roads and drivers switch to electric.
There has been pressure on the Government to address the £35billion funding “black hole” that will be left with the reduction in petrol and diesel cars.
Currently, electric cars do not pay fuel duty or vehicle excise duty as they do not use fuel, nor do they produce tailpipe emissions.
Steve Nash, CEO of the Institute of the Motor Industry, said the Government’s plans could harm the sale of electric cars in the UK.
He said: “The news reported at the end of last week that the Treasury plans to add vehicle excise duty to electric cars is not surprising to most in the industry – albeit it seems slightly counter-intuitive to the Government’s goal of reducing particulates.
“Clearly the reduction in revenues from road tax on Internal Combustion Engine (ICE) vehicles is a concern for Government.
“But we really hope that Jeremy Hunt doesn’t just see the addition of duty on electric vehicles as a means to generate income for Government coffers generally.”
A Whitehall source claimed it was now inevitable that electric vehicles would be subject to road tax “at some point”, The Telegraph reported.
The source added that the Treasury was considering “when it would be done”.
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Many in the industry have called on the Government to abandon the rumoured plans, saying it may kerb the uptake of electric vehicles.
According to Zap-Map, there were more than 590,000 battery-electric cars as of the end of October 2022.
Last year saw the biggest annual increase in number of registrations, with more than 395,000 battery-electric cars registered, showing a growth of 92 percent in 2020.
Mr Nash added: “The skills gap for those qualified to service and repair electric vehicles is still considerable.
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“Indeed it could actually widen rather than reduce in the next few years as a direct consequence of current financial pressures impacting businesses’ training budgets.
“While the availability of qualified technicians remains a bit of a postcode lottery, consumer confidence in making the switch to electric will be limited.
“And that, of course, could have a knock-on impact on the 2030 target.
“An injection of investment in training – especially for the independent sector which often feels the pinch first from an economic downturn – would certainly help tackle this issue.”
With the 2030 sales ban of petrol and diesel vehicles around the corner, some in the Government are worried about a potential £35billion shortfall. It is estimated that £7billion will come from VED, while the remaining £28billion per year would come from a loss in fuel duty.
In February, a Government report suggested that motorists should be taxed based on the number of miles they drive. The Treasury said tax revenues would keep pace with changes prompted by the take-up of electric cars.
The Government claimed “radical reform” was needed otherwise there would be no revenue from motoring taxation once net zero is reached in 2050, and potentially even before in 2040.
With Jeremy Hunt set to unveil his Autumn Budget later today, millions of drivers will look to see what the Government has planned.
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