A new pay-per-mile road pricing car tax must be introduced as soon as possible, according to experts at the Tony Blair Institute (TBI).
The think tank has stressed the Government needed to sort out a new system quickly with fuel duty and VED fees rapidly declining as more people make the jump to electric cars.
EV owners will pay some form of road tax from 2025 with Vehicle Excise Duty (VED) rates introduced next year.
However, no plan has been revealed on how the Government will replace lost income from fuel duty collected at petrol stations.
It comes after analysts predicted that the Treasury would need to find £25billion to recover the potential loss of income.
According to the Office for Budget Responsibility (OBR), fuel duty taxes will fall from £25.1bn in 2022-23 to zero by 2050.
James Browne, senior policy adviser at the TBI said changes needed to be made as soon as possible.
He said: “With fuel duty fading as a source of revenue, the government needs to set out a plan for moving towards road pricing as soon as possible.”
Mr Browne added: “This [road tax] needs to happen urgently, before too many people buy electric vehicles on the basis that they will not be taxed, making it impossible to introduce it later.”
According to the Department for Transport, road pricing involves “direct charges levied on motorists” for using public roads.
The DfT has previously warned that cheaper running costs are likely to lead to more people using the roads.
They predicted that a shift to electric vehicles would increase national traffic levels by 51 percent between 2015 and 2050.
The TBI has addressed this concern and warned funding would be needed to stop traffic jams from surging across the country.
But, Colin Walker, head of transport at the Energy and Climate Intelligence Unit warned it would be “political suicide” for either side to mention road pricing ahead of the next General Election.
A Treasury spokesperson said: “We are making sure that motoring tax revenues keep pace with the switch to electric vehicles, whilst keeping it affordable for consumers, and have no plans to introduce road pricing.
“With the electric vehicle transition accelerating, it’s right that all drivers start to make a fair tax contribution through changes to Vehicle Excise Duty while we’re also supporting through over £2.5bn in incentives.”
