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Fuel and excise duty must be replaced with new tax, MPs say | Fuel and excise duty must be replaced with new tax, MPs say |
(about 5 hours later) | |
The UK needs to create a new motoring tax to plug the revenue gap as drivers switch to electric cars, MPs have said. | The UK needs to create a new motoring tax to plug the revenue gap as drivers switch to electric cars, MPs have said. |
The government should tax motorists based on miles travelled as the use of petrol and diesel vehicles decreases, the Transport Select Committee said. | The government should tax motorists based on miles travelled as the use of petrol and diesel vehicles decreases, the Transport Select Committee said. |
If no action is taken this year, the UK faces a £35bn "black hole" in its finances, they said. | If no action is taken this year, the UK faces a £35bn "black hole" in its finances, they said. |
The Treasury said tax revenues would keep pace with changes prompted by electric vehicle take-up. | The Treasury said tax revenues would keep pace with changes prompted by electric vehicle take-up. |
Sales of new petrol and diesel cars and vans will be banned in the UK from 2030 and sales of electric cars are already soaring. | Sales of new petrol and diesel cars and vans will be banned in the UK from 2030 and sales of electric cars are already soaring. |
Taken together, vehicle excise duty - better known as "car tax" - and fuel duty that motorists pay at the pump, raise around £35bn a year, but neither tax is levied on pure electric vehicles. | |
The committee warned there is likely to be no revenue from existing tax sources by 2040. | The committee warned there is likely to be no revenue from existing tax sources by 2040. |
The MPs said charging people based on how much they drive, using technology to track cars' movements, should be considered. | |
Such a scheme could factor in the type of vehicle and congestion, and support vulnerable groups such as those with mobility issues, and people in remote areas, the committee said. | Such a scheme could factor in the type of vehicle and congestion, and support vulnerable groups such as those with mobility issues, and people in remote areas, the committee said. |
Motorists should pay "the same or less" than they do currently, the MPs said. | Motorists should pay "the same or less" than they do currently, the MPs said. |
Road pricing is not a new idea. But it has previously proved an unpopular one in the UK. | Road pricing is not a new idea. But it has previously proved an unpopular one in the UK. |
Motoring groups believe many drivers do now support the principle of paying more tax the more you drive. | Motoring groups believe many drivers do now support the principle of paying more tax the more you drive. |
But public opinion is not the only factor - there are many outstanding questions. | But public opinion is not the only factor - there are many outstanding questions. |
If road pricing did come in, what exact technology would be used, who would provide it, and what reassurances could be offered over privacy, given the amount of data captured? | If road pricing did come in, what exact technology would be used, who would provide it, and what reassurances could be offered over privacy, given the amount of data captured? |
How could it work alongside the local schemes already in place, such as city congestion charges? | How could it work alongside the local schemes already in place, such as city congestion charges? |
And when would be the right time? Too early and it might put people off buying electric cars. | And when would be the right time? Too early and it might put people off buying electric cars. |
Too late and cheaper driving could lead to more congestion, and electric car drivers who've grown used to not being taxed may not react positively to the belated introduction of a charge. | Too late and cheaper driving could lead to more congestion, and electric car drivers who've grown used to not being taxed may not react positively to the belated introduction of a charge. |
Huw Merriman, the chair of the Transport Committee, said that unless the government acts now the "loss of two major sources of motor taxation will leave a £35bn black hole" in government finances. | Huw Merriman, the chair of the Transport Committee, said that unless the government acts now the "loss of two major sources of motor taxation will leave a £35bn black hole" in government finances. |
"That's 4% of the entire tax-take, " he said. "Only £7bn of this goes back to the roads. Schools and hospitals could be [hit] if motorists don't continue to pay." | "That's 4% of the entire tax-take, " he said. "Only £7bn of this goes back to the roads. Schools and hospitals could be [hit] if motorists don't continue to pay." |
He said using road pricing technology could help ease congestion. | He said using road pricing technology could help ease congestion. |
"By using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives," he said, adding: "Net-zero emissions should not mean zero tax revenue." | "By using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives," he said, adding: "Net-zero emissions should not mean zero tax revenue." |
The committee called for the Treasury and the Department for Transport to set up an arms length body to look at future motoring taxation. | The committee called for the Treasury and the Department for Transport to set up an arms length body to look at future motoring taxation. |
A Treasury spokesperson said: "The government has committed to ensuring that motoring tax revenues keep pace with the changes brought about by the switch to electric vehicles, whilst keeping the transition affordable for consumers. | A Treasury spokesperson said: "The government has committed to ensuring that motoring tax revenues keep pace with the changes brought about by the switch to electric vehicles, whilst keeping the transition affordable for consumers. |
"We will respond to the committee's recommendations in full in due course." | "We will respond to the committee's recommendations in full in due course." |
Electric car sales soar, but chip shortage hits market | Electric car sales soar, but chip shortage hits market |
Car production falls to lowest level for 65 years | Car production falls to lowest level for 65 years |
Figures from the Society of Motor Manufacturers and Traders show battery electric vehicles accounted for more than one in ten new cars registered in the UK last year. | Figures from the Society of Motor Manufacturers and Traders show battery electric vehicles accounted for more than one in ten new cars registered in the UK last year. |
RAC Foundation director Steve Gooding said the "silver lining of zero-carbon motoring comes wrapped in a cloud of trouble for the chancellor as his fuel duty income dries up". | RAC Foundation director Steve Gooding said the "silver lining of zero-carbon motoring comes wrapped in a cloud of trouble for the chancellor as his fuel duty income dries up". |
"Forget 2050, our analysis shows that fuel duty revenue from cars alone could be down by £5bn a year as soon as 2028 because of accelerating sales of battery-powered cars," he said. | "Forget 2050, our analysis shows that fuel duty revenue from cars alone could be down by £5bn a year as soon as 2028 because of accelerating sales of battery-powered cars," he said. |
"Drivers choosing to go electric deserve to know what is coming next - particularly if the promise of cheap per-mile running costs is set to be undermined by a future tax change. | "Drivers choosing to go electric deserve to know what is coming next - particularly if the promise of cheap per-mile running costs is set to be undermined by a future tax change. |
He added that the Treasury needed to act promptly or risk "a furious backlash from drivers who made the choice to go electric expecting to save money". | He added that the Treasury needed to act promptly or risk "a furious backlash from drivers who made the choice to go electric expecting to save money". |
Silviya Barrett, head of policy at the Campaign for Better Transport, said: "Road pricing, based on distance travelled and how polluting a vehicle is, can be a fairer system for everyone. | Silviya Barrett, head of policy at the Campaign for Better Transport, said: "Road pricing, based on distance travelled and how polluting a vehicle is, can be a fairer system for everyone. |
"It can reduce congestion, air pollution and carbon emissions and encourage a shift to greener modes where possible." | "It can reduce congestion, air pollution and carbon emissions and encourage a shift to greener modes where possible." |
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