Motoring taxes must be overhauled to deal with the opportunities and challenges posed by electric vehicle (EV) adoption.
That’s the verdict from the British Vehicle Rental and Leasing Association (BVRLA), which has published a new report suggesting as transport becomes increasingly connected, electric and even autonomous, the relevant tax systems must be modernised to prepare for a zero-emission future.
It argues not only is this necessary to drive behaviour change limiting congestion and air pollution, it is needed to fund the UK road network as carbon dioxide-based income declines by up to £2 billion per year.
The report suggests a fairer system could be based on distance travelled, time of journey or location, rather than on carbon dioxide emissions.
It emphasises taxes must give motorists a clear and consistent message that investing in plug-in EVs will bring economic benefits and stresses that the tax must be adaptable as these technologies are likely to continue to evolve.
Paul Johnson, Director of the Institute for Fiscal Studies, said of the tax: “Leave it too late and there is the real risk that we manage the transition inefficiently, lose huge amounts of revenue over the long run and see ever growing congestion on our roads.”
Energy UK’s Director of Policy, Audrey Gallacher noted: “Energy UK is clear that we must avoid blunt recovery methods such as transferring existing vehicle taxes onto electricity bills – a highly regressive approach that would negatively impact vulnerable customers – and instead examine in detail the potential for more sophisticated and smarter options as highlighted in the report.”