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In the upcoming Budget, electric vehicle (EV) drivers might face a new tax as the chancellor looks for ways to generate more revenue. Discussions within the government have suggested the introduction of a levy on EVs to ensure a fairer system for all drivers. The absence of an equivalent to fuel duty for electric vehicles has prompted these considerations.
A recent report in the Daily Telegraph hinted that the Budget could unveil a pay-per-mile charge for EV drivers. This charge, set at 3p per mile, would be in addition to existing road taxes, potentially adding £12 to a trip from London to Edinburgh. Hybrid car owners would also be subject to this charge, albeit at a reduced rate, with the requirement to estimate and pay for their annual road usage.
The ongoing transition to electric vehicles poses a challenge for government revenues as it eliminates the fuel duty revenue derived from petrol and diesel cars. This shortfall has sparked discussions around creating a taxation system that adequately funds roads, infrastructure, and public services while promoting the shift to EVs. Despite the potential introduction of new taxes, the government remains committed to supporting the transition away from traditional combustion engine vehicles.
Concerns have been raised about a growing “tax gap” resulting from the declining number of petrol and diesel vehicles on roads. The spotlight is now on pay-per-mile systems as a potential solution, although there has been resistance from certain quarters. AA president, Edmund King, cautioned the government to proceed with caution to avoid impeding the progress towards widespread adoption of electric vehicles. He emphasized the need for clarity on the proposed tax measures to assess their fairness and impact on drivers
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