Rachel Reeves has been told to axe her controversial 3p pay-per-mile car tax scheme, with industry experts unified in their disappointment at the scheme. Experts from leading motoring bodies such as AutoTrader and the AA have called on Reeves to reconsider the charge over fears the move could backfire on the electric car market.
The new 3p per mile fee charge is expected to hit electric car owners from 2028 and is a bid to offset lost fuel duty revenues. Early predictions indicate the scheme could increase motoring costs by £250 per year but it’s expected the scheme could generate around £1.8billion in additional revenue by 2031.
Ian Plummer, chief commercial officer at AutoTrader called on the Chancellor to “think carefully” over fears the scheme could lead to diminished EV demand.
Ian said: “We need more carrot and less stick if we’re serious about the electric transition. The Chancellor clearly needs to raise revenue, but if she wants to encourage EV adoption, she should think extremely carefully before introducing pay-per-mile charging for EVs. Drivers respond to incentives and anything that puts up running costs for electric vehicles will slow that momentum.”
AA president Edmund King also suggested the Government had to “tread carefully” not to impact the UK’s fragile electric car market.
He said: “Whilst we acknowledge the Treasury is losing fuel duty revenue as drivers go electric, the Government has to tread carefully unless their actions slow down the transition to EVs. The ZEV mandate for 28% of new car sales to be zero emissions this year will not be met as sales are running at just 22%.
“We need to see the detail of this proposal to ascertain whether these new taxes will be equitable or just an extra tax.”
Under the proposals, motorists may be forced to pay up to £3 to travel one-way between Cambridge and Oxford and up to £12 to go between London and Edinburgh. However, it is understood that a new pay-per-mile rate would be issued on top of other road taxes instead of replacing them.
It is believed petrol cars currently pay £600 a year in fuel duty costs, so the Government will argue that EV owners are still getting a better deal. But, Vicky Edmonds, CEO of EVA England suggested that drivers were already struggling to justify making the switch, with extra fees unlikely to help.
She said: “This is the wrong time to bring in further costs for EV drivers. Our survey data shows that at least half of drivers are still finding the upfront purchase costs of these vehicles to be too high, and that half of EV drivers without driveways are finding their vehicles more expensive to run than their former petrol and diesel cars. These challenges to switching to electric must be addressed urgently, and before any scheme that suggests additional costs is considered.”
Details around how the charge could be collected are yet to emerge, with fears that road users may need to prove how many miles they have travelled. Iain Reid, Head of Editorial at Carwow suggested finding out all the information about how the scheme will work was key.
He remarked: “As it always is, the devil will be in the details; how will it actually be implemented? Before EVs, we effectively had a pay-per-mile system through fuel duty: the more you drove, the more tax you paid. Now, it’s trickier. Would it rely on ANPR (Automatic Number Plate Recognition) cameras, or some other mechanism? And who would pay for that infrastructure?
“To ensure confidence and protect privacy, any new system should give drivers the option to submit mileage in a way that suits them, from manual odometer readings to automated GPS-based reporting. Crucially, this wouldn’t require location tracking, only the raw miles would matter.”
