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Government reportedly considering new 'pay-per-mile' road tax system

Published 27 November 2020

The Government is reportedly considering a new 'pay-per-mile' road tax VED pricing scheme.

The Chancellor Rishi Sunak is believed to be looking at ways to plug the £40 billion tax revenue shortfall that would be caused by the 2030 ban on the sale of new petrol and diesel cars.

According to a report in The Times, a 'pay-per-mile' road tax scheme is thought to be under consideration by Rishi Sunak, although it isn't clear how the system would operate or how much motorists would be charged. 

The newspaper reported that the chancellor was "very interested" in the idea of a road pricing scheme, although it's said not to be imminent. The Government first considered road pricing 13 years ago, but plans were dropped over fears of a public backlash.

The most recent figures from the Society for Motor Manufacturers and Traders (SMMT) show that almost 76,000 electric vehicles (EVs) have been registered so far in 2020. This represents a 168 per cent increase in EV car registrations, while new diesel sales are down more than 50 per cent and petrol down by 39 per cent. However, that said, EVs still only make up 1.4 per cent of the market.

RAC head of roads policy Nicholas Lyes said: "Drivers are firm in their views that any new system must not be used as a way to increase the tax burden on them.

"Despite this, RAC research shows around four-in-10 drivers believe that some form of ‘pay-per mile’ system would be fairer than the current system of fuel duty, while half (49 per cent) agree that the more someone drives the more they should pay in tax."

Comments

hissingsid    on 28 November 2020

I am one of the 49 per cent who believes that the more someone drives the more they should pay in tax. For decades many of us have suggested scrapping bureaucratic VED, which a significant minority of motorists manage to avoid, and placing the entire tax burden on fuel which is almost impossible to avoid.

Any attempt to reconsider road pricing is likely to provoke the same public resentment as it did 13 years ago. People do not want their every move monitored by a spy box in the car.

   on 28 November 2020

Given that Fuel Duty is remarkably easy to collect when the stuff leaves the refineries, why institute the requirement to follow millions of individual end users in their cars, vans, lorries etc etc? That will be an administrative nightmare.

However, EV owners best not think they are getting away "Tax Free" from electricity which is 5% VAT instead of 20% for petrol & diesel...that'll get sorted unless it's seen as a Green incentive, and only for so long as it takes to raise EV numbers up to the million mark for example.

The Electricity charging point providers would be easier to register and get them to account for 20% VAT plus whatever is required to cover 50/60p per litre in Excise Duty.

Home charging point suppliers could be tapped for loot as well, those cuddly SMART meters could be used to separate house from vehicle electricity usage..no doubt.

Anyhow, I'm sure Rishi doesn't need my help to raise duties and taxes...

DJM
====

davethesteam    on 2 December 2020

I agree with DJM overall, but should point out that the home wall chargers are smart anyway - meaning they can be monitored (and regulated) from afar.

Re charging away from home - have you seen the charges being levied by the infrastructure suppliers for the likes of motorway charging points? I have seen figures as gigh as 70p/KwH - getting on for 3 x the price we pay at home - that to me renders the stated savings of electric totally wiped out on a ppmile basis compared with fossil fuels

Richard Huddleston    on 2 December 2020

3x the price? I pay 15.5p/kwh so nearly 5x the price.

hissingsid    on 30 November 2020

Another good reason not to have a SMART meter in my home.
Like road pricing it is surveillance by stealth.

Engineer Andy    on 1 December 2020

Another good reason not to have a SMART meter in my home. Like road pricing it is surveillance by stealth.

Plus they can cut you off at any time should your opinions be contrary to what they want. Note also that the same people pushing the government on EVs and road pricing are the same people pushing for more and harsher/longer lockdowns and a move to online shopping.

Rather like a forthcoming 'medicine' that saying 'no' to because it has only been tested for 3-6 months instead of 5-10 years (as normal) means you'll be not allowed to do most things in society.

1984 here we come...

Geoffrey Brightwell    on 2 December 2020

Well said Hissingsid I'm sure they brought up this road tax on fuel in the 60's/70's but it was too controversia,l probably because rich people have fuel guzzlers.

As electric cars obviously run off electric where the VAT is 5%, should this go up to 20% as it is with petrol and diesel cars and surely we are only moving the pollution from the individual cars exhaust to a big lump of pollution over power stations

VINCENT MILLARD    on 3 December 2020

Well said Hissingsid I'm sure they brought up this road tax on fuel in the 60's/70's but it was too controversia,l probably because rich people have fuel guzzlers.

As electric cars obviously run off electric where the VAT is 5%, should this go up to 20% as it is with petrol and diesel cars and surely we are only moving the pollution from the individual cars exhaust to a big lump of pollution over power stations

So you haven't seen the report that the UKs last Coal Powered Station has gone Green?

Geoffrey Brightwell    on 3 December 2020

No but have read they will be closed by 2023 except for the Czech owned one and they will burn straw wood plant material.

Rustyrig    on 2 December 2020

I think he should be looking at a standard tariff based on vehicle weight and load capacity basic light car £50 per year thereafter pay per mile fuel tax.
No car should be free, they use the roads that require work to repair why some get it free don't get it.
Weight invariably leads to damage, so a Rolls or a Bentley would pay more standard tariff than a Vauxhall Corsa or a Honda Jazz, both of the top end market cars must weigh at least twice that of the Corsa and Jazz, the fact that the Rolls and the Bentley would cost more to run fuel wise the right vehicles get charged correctly.

DaveWK    on 2 December 2020

I remember when they decided to change from power and weight to a standard road tax- about £12 pounds ten shillings a year I think. There was an outcry, "That means a toff with a Rolls Royce only pays the same as a man with a Ford Eight." Answer, "Quite right- good innit"? If they do it two pence a mile would be reasonable so long as they remove the fuel tax element of the seventy percent taxation. Not a chance, and what about driving abroad-if the ever let you again.

Michael Read    on 2 December 2020

This would also take into account the extra weight of an EV.

VINCENT MILLARD    on 3 December 2020

I think he should be looking at a standard tariff based on vehicle weight and load capacity basic light car £50 per year thereafter pay per mile fuel tax. No car should be free, they use the roads that require work to repair why some get it free don't get it. Weight invariably leads to damage, so a Rolls or a Bentley would pay more standard tariff than a Vauxhall Corsa or a Honda Jazz, both of the top end market cars must weigh at least twice that of the Corsa and Jazz, the fact that the Rolls and the Bentley would cost more to run fuel wise the right vehicles get charged correctly.

I totally agree! However, have you seen how much the Road Tax is on Luxury Vehicles?

It is a good Idea to keep it to the Bands we have now but put it all on VED not the Fuel, and then Raise the Bands to cover EVs and Hybrids, as you say they actually weigh more than an ICE powered Vehicle so in theory do more Damage.

But ALL of the Revenue must go to repairing the Roads!

Fenwoman    on 10 December 2020

VED (car tax) has got nothing to do with repairing roads.

Fenwoman    on 10 December 2020

"No car should be free, they use the roads that require work to repair why some get it free don't get it."


You seem to be labouring under the misapprehension that VED (car tax) has got anything to do with maintaining roads. It hasn't. Cars aren't 'free'. It costs to buy them, it costs to tax them, it costs to insure them, it costs to maintain them.

Geoff Went    on 2 December 2020

This is a very good scheme as the French did away with the VED some 15 years ago. The French did not even increase the price of fuel as the additional revenue collected was compensation for all the costs associated with the collection of VED and it captured the VED evaders which ran into billions of Euros. Works for me and is a lot fairer. I don't know why the government are prevaricating.

Edited by Geoff Went on 02/12/2020 at 11:00

conman    on 2 December 2020

Unless Rishi is a complete divi, He must realise that driving 100 miles in a Porsche is totally different to driving 100 miles Mini. so how could he work out the difference. If he can't then roll on my new porsche.

conman    on 2 December 2020

The French charge if you use their motorways, but the dual carriageways and smaller roads are all free, But France is a large country and the distances between are vast. Here in the UK there are not many alternatives to the motorways if you want to get anywhere. Problem is as with the M6 Toll road they just keeping hiking the price up and up till they price honest hard working people off the road. Then the Conservatives will wonder how on earth they lost the next election.

Geoffrey Brightwell    on 4 December 2020

Many of our old roads are still there and many places have been bypassed. The problem with French non motorway roads is that the speed limit is 50mph

Fenwoman    on 10 December 2020

They won't lose the next election. People will always vote in those who don't care about them. It's the class system in the UK where, for centuries, we're told that rich people are better than us peasants. Look at the last election after a decade of austerity and cuts to vital services, council tax increases to try to cover the shortfall, record homelessness, disabled people , even terminally ill being told they have to find a job, rise of food banks. And people *still* voted for them.

Andrew Whitworth    on 2 December 2020

In Japan the one of the features included in vehicle tax is the size of the vehicle. This encourages people to purchase smaller lighter vehicles. Smaller vehicles would enable more cars to drive or park in a said 100 metres of road. They are lighter, which reduces wear and tear of the road, plus smaller vehicles are more fuel efficient.

William Bound    on 2 December 2020

Why should EV ca get away with not paying VED they use the road as well.
What will happen when there are only EV cars on the road. Will the tax burden end up on lorries as i cannot see them being electric..
Maybe a hefty tax on charging them.

Johnno431    on 2 December 2020

Motoring taxes are not entirely different to other forms of taxation in that we know how much we pay but we have no idea how it’s spent. Similarly we know that the taxes collected from motorists are far far greater than the amount claimed to be spent on the roads.
What we desperately need is open books revealing this so that we can perhaps accept that our money is being spent wisely - or not, as the case my be.
It’s a similar story with so many other taxes eg NI tax and NHS funding. We know how much we pay in NI contributions but what we don’t know is whether this goes to fund the NHS or some nefarious expenditure elsewhere.
It’s high time the government practiced transparency which, I believe, would help us all to understand and accept various tax increases.
After all, who of us would object to an increase in NI contributions if they were hypothecated .?

Ian Basford    on 2 December 2020

switching road tax to fuel has been promoted by the man in the street consistently since the 1980s. My question is HOW are they going to monitor your mileage? What technology will they use and how will it be retro fitted?

Michael Read    on 2 December 2020

And guess who pays for it!

conman    on 5 December 2020

Hello have you not heard that in 2022 all new cars must be fitted with black boxes, to monitor your driving. The UK has agreed to implement the EU policies.

MykiMyk    on 2 December 2020

even though we do quite a bit of mileage in our car the idea of a mileage based tax seems to be a fair way of taxation as it taxes those who use the roads the most, create a fair amount of vehicle pollution and it taxes EVs too. it may also encourage some people back to public transport.
my guess is the MOT test and V5 (when selling/scrapping the car) will be used as the mileage checker BUT I can see a huge growth in vehicle clocking off the back of it

Howard Millichap    on 2 December 2020

Considering the current "Track & Trace" debacle does anyone think they'll be able to monitor your driving movements? And even if they do get it working, I'm sure the clever people will be able to remove the Black Box required and leave it at home.

Howard Millichap    on 2 December 2020

So many, too many people seem to forget that we already pay per mile because of the VAST amounts of tax on the fuel we put in our cars.

   on 2 December 2020

I live in a rural area. Only 3 buses a day, and then a walk to the bus stop. Driving anywhere and long distances are the norm to be part of society and the community, also to access services. Pay per mile will be regressive tax for rural dwellers.

Jon Burns    on 2 December 2020

We use more fuel!

I travel 36,500 miles a year to my place of work. I chose to live in an area where my family will have a safe habitat and pleasant surroundings. The flip side is I have to travel distance everyday to work. If a road pricing scheme comes into affect it could cause financial hardship for me. Plus I am not in the position where I can change my car to an electric car but also it would not be able to cope with the travel that I do.

J

whatdoiknow    on 2 December 2020

Those who drive more do pay more tax in VAT and Fuel Duty on the fuel they use.

Ash333    on 2 December 2020

Peer mile works for me whatever fuel. I own 4 vehicles 3 Diesel 1 Hybrid

aethelwulf    on 2 December 2020

I presume the government would get some one like Capita to run this as they do the Congestion Charge. Of course it is feasible to have cameras on all roads or at the main road junctions. The Congestion Charge is collected apart from those that do not register their cars in their name or have cloned number-plates. There will always be crooks but the majority will pay up. It has taken a long time for government to come clean on the fact that EVs are a tax loss of high magnitude to the Exchequer. Obviously , the free VED is a lost leader to suck us into the trap. No good putting 20% VAT on electricity as the benefits would have to increase to pay the 'poor'. Also, 20% would not pay for the fuel duty which is 50 p odd per litre plus VAT. No, it needs some real nasty taxes to make up the losses. At the same time the economy must not be allowed to tank. Vehicles are a massive part of the economy and most housing estates have been built in the countryside for years well away form bus routes. No , there are a lot of factors at work here. Why not just make tolls on Motorways as do the French . Electronically collected even the travelling community would pay them ( if they travel by Motorway ) .I use them to go on holiday - not this year but it would induce me to fly more and catch a bus to my local airport East Midlands. After 9.30 am it is free for me.

Corina J Poore    on 2 December 2020

It is clear that this pay-as-you-go system is being considered because they get no tax from the sale of the fuel if you are charging it electrically. So this means that anyone with electric cars will gradually be clobbered more and more to make up for the loss of tax on petrol and diesel- oh where is hydrogen? That remains the best solution!

Brian rowe    on 2 December 2020

You're one of the few that have mentioned Hydrogen fueled vehicles ,it seems that the Government doesn't want them, I liked your comments.

   on 2 December 2020

To be honest, I can't see this happening. First of all, I assume they will have to fit some sort of smart box to every single vehicle on the road, at their expense, not sure of the legalities of that, but I certainly wont have one given the choice. I think they are over estimating the amount of people that will switch to electric (or can afford to). The infrastructure is not there yet, and won't be for a considerable time. Also all those who bought a low emission vehicle with zero or very little tax will be pretty p***** off. I pay zero tax on a used car bought last year, the main reason was because it was zero tax. Motorists have been paying through the nose to keep a vehicle on the road, and whenever there is a financial gap to fill, it is always the motorists that are targeted. If this scheme goes ahead, there will be many, many motorists who will be priced off the road, and therefor will not be able to travel to work, costing the tax payer even more in benefit payouts. I've always believed that road tax should paid through fuel costs, the more you travel, the more you pay, and you can't avoid it. This is too simple of an idea for the government. Another thing, at the moment the battery in an electric vehicle is only guaranteed to last between 5 and 7 years, I believe so what's going to happen to all those cars when the battery finally dies, and with the price of electric cars, do you really think the majority will be able to afford replacing it every 3 or 5 years? And where is all this electric going to come from if 'everyone' goes electric?

conman    on 5 December 2020

the black box is coming from 2022 all new vehicles must be fitted with black boxes to monitor your driving., distance, speed etc. The EU suggested it and the UK are following as agreed. The government will wait a year or two then implement the black boxes to get their revenue. Nothing is free.

terry59    on 2 December 2020

I agree with the last writer. Going electric is supposed to reduce the carbon footprint, but every car built has a carbon footprint cost, as do the batteries used, as does the device used to generate electricity in the first place, be it wind, sun or Nuclear.

What about the dead or replaced batteries, which there will be loads of, as they all start dying and needing replacement. What's the carbon footprint cost of all of this going to be. I think we'll be returning to fossil fuels once everyone realises that we've been duped again.

Who's going to pay for all the current fuel stations to be retrofitted with electric chargers and then late stripped of the fuel tanks, when they become redundant. Can't see Construction Companies using Electric Cranes, Bulldozers, diggers etc for a long time yet.

Perhaps electric isn't the answer? Maybe we need a natural resource like water, where the Hydrogen is split form the oxygen, and used to run whatever engine they design to run on hydrogen; with the oxygen released into the atmosphere.
I'm no chemist, but I'm sure someone has been trying to build this, or already has and been paid to keep quiet about it!

Who knows what the real answer is, maybe is just simple air, but we would need to start replanting trees at a rate unseen for years.

Whatever the answer is, the 'vehicle' driver of the future will be paying for it, I've no doubt about that.

Mr Ian Bridges    on 2 December 2020

Of course they want tax per mile.

Last time it was proposed the charge would be up to £1.30 per mile. 10000 mile driver would pay up to £13000 each year. Think about that !

They say how well the French autoroutes work. They cost an average of around 20p per mile. 10000 miles in France is £2000, bad enough.

Why does our government want to c****** the economy by blatent greed, proposing charges over 600% more than most other countries.

DLDLDL    on 2 December 2020

Pay per mile is fraught with difficulties. A uniform charge per mile will put the rural shires (Tory voting) up in arms, so it has to be a differential charge - and I am sure that some outsourcing giant will be given the opportunity to develop such a system at our expense. (Which may mean it never happens - or that the implementation is bodged and untrusted.) Smart meters are a ploy to be able to charge variable amounts (but based on time of use rather than necessarily on location of use). To do something similar with road use requires either "black boxes" in all cars or extensive use of Automatic Numberplate Recognition (ANPR - as used for congestion charging). Black boxes can probably be circumvented (I imagine a new backstreet industry popping up) and they are not easily auditable - can we get a print out of what our charges are for (the sums could be significant) and can we dispute whether we are being charged for the motorway when we were using the side road alongside? ANPR is a privacy intrusion and requires a massive infrastructure - but could probably (at a cost) produce road/time bills. Cloning may become a lot more common. Using transponders instead of numberplates might reduce the opportunity for cloning. If we are going to have cost by road used and or by time of use, will there be a demand to know the charges in advance and will we have people deliberately driving slow (or fast) to ensure that the use a particular road at a particular time? Fuel charge begins to look like quite a good system. Small subsidies/rebates could be given to rural fuel suppliers to (crudely) address issues of essential rural use but non use of expensive motorways. But make the rebate too high and you will have people congesting the countryside as they "commute to the cheap fuel stations". The problem is those damned electric vehicles escaping fuel charge! Perhaps that is where the government should focus its attention. Can they create an EV electricity tariff and ensure that the system is not bypassed? The corollary of somehow loading the cost of recharging electric vehicles is that to maintain the incentive to "buy new electric" rather than keep the old polluting Internal Combustion engined vehicle going is that Petrol/Diesel/BurntHydrogen Fuel duty will have to rise!

Edited by DLDLDL on 02/12/2020 at 18:28

Ubermik    on 2 December 2020

This is just laughable but also sad that so many "allegedly" intelligent people appear to flick the off switch for their brain with topics like this

Motorists ALREADY pay a "per mile" tax, its called FUEL DUTY

But so many lazy ill informed people who are caught up in the non scientific religion of global warming just gulp down this type of nonsense without a shred of examination of even common sense being brought to bear

Governments are desperately trying to rush through their climate alarmism driven money making schemes before plain old observation exposes their scam, even NASA, one of the biggest propogandists for the cult of climate alarmism has had to admit that the polar ice caps have increased by a huge amount year on year, they also have no choice but to admit crop yields have been increasing year on year to record amounts BECAUSE of increased CO2 whilst claiming it destroys crops for the IPCC propaganda reports and similarly NASA also admits that despite urban sprawl AND deforestation that the planet has been increasing green globally year on year for several decades, meaning despite mans active expansion and destruction of greenery the planet as a whole has naturally seen a year on year increase in the amount of plant life, which again they admit is mostly BECAUSE of the increased CO2

So its unlikely to be long before the lies are impossible to back up even to the most devout followers of this religion of climatology so they are just trying to push harder and faster to line their pockets more quickly before the scam becomes a historic laughing stock

This is akin to the government WASTING the tax motorists already pay on lesbian dance theory degrees and critical race theory courses and introducing toll roads to get even more money to cover the shortfall for costs ALREADY paid for by motorists, in effect taxing them twice for the exact same thing because they siphoned off the first amount into pet schemes or party donors pockets

This is no different, motorists ALREADY pay per mile via fuel duty, even worse everyone ALSO pays "per mile" for every freeloader driving an electric car due to various tax subsidies, so even a non driving pedestrian helps fun rich peoples electric car habit

So this like many taxes is simply a wallet gouging double dip into people bank accounts disguised as a "new" tax rather than the DUPLICATE tax it actually is, and is backed up and justified by non scientific politically driven fake science from a group (climate "scientists") who quite literally have made ZERO accurate predictions over the past 5 decades generally not just being "wrong" in their "scientifically" justified predictions of doom and gloom, but generally being so far from the reality of what is observed that it makes you wonder if they just randomly picked numbers from a hat to make their predictions

In ANY other area of science once so many predictions were PROVEN to be completely incorrect and miles off target it would slunk off in shame and reassess, yet because AGW is politically rather than scientifically driven no amount of abject failure even slows the push to impose financial dystopian control across the globe

AGW is to scientific principles what nuclear fusion is to refrigeration

Isaac Suleman    on 3 December 2020

Agree with pay per mile

Richard M Russell    on 3 December 2020

Nice one from Ubermik. Fuel duty is pay per mile and a very efficient way of collecting tax. Electric vehicles over their life cycle will not save the planet. Hybrid SUVs are particularly pointless and because of their weight and size both polluting through accelerated tyre wear, brake wear (brake dust)r and wear to road surfaces. They are far too big for UK roads anyway.

VINCENT MILLARD    on 3 December 2020

I am one of the 49 per cent who believes that the more someone drives the more they should pay in tax. For decades many of us have suggested scrapping bureaucratic VED, which a significant minority of motorists manage to avoid, and placing the entire tax burden on fuel which is almost impossible to avoid. Any attempt to reconsider road pricing is likely to provoke the same public resentment as it did 13 years ago. People do not want their every move monitored by a spy box in the car.

You do know that your car (if new enough) Has a Computer with a memory, that the Likes of Engineers can interrogate?

Tony Mahon    on 3 December 2020

Going to a pay per mile system would greatly benefit me but I know of plenty of people who are not affluent and who live in rural areas with very infrequent public transport and so they would be greatly disadvantaged by such a scheme. For this reason I think that we have to leave the system as is. Unless we just don't care about anybody else that is.

hissingsid    on 4 December 2020

The Road Fund was established by the roads Act 1920, on the basis that no other claims would be made on the Exchequer for the construction of new roads. The Road Fund was never fully utilised, and the Government lost no time in using it's annual surpluses for other purposes.

Between 1920 and 1936 the tax disc was officially known as the Road Fund Licence. The Road Fund effectively came to an end with the Finance Act 1936, after which the proceeds of road vehicle duties were paid directly into the Exchequer. It remained on the statute Book until it was finally wound up under the Miscellaneous Financial Provisions Act 1955.

Then as now, road users saw their taxes swallowed up into unspecified government expenditure over which they had no control.

ch3no2    on 5 December 2020

This issue just illustrates that electric cars are not the long term solution. Electric doesn't work for lorries etc, there are going to be real problems recovering lost tax on petrol and diesel and electric cars take too long to charge. The long term answer is hydrogen. True there are technical difficulties but these can be overcome and hydrogen is the answer both for our transport and our homes. We have a ready made distribution system in place in the form of our natural gas system. Legislation is forbidding use of gas boilers in new homes requiring use of electric heat pumps, but these will not work in the existing housing stock a lot of which was built in the 20's and 30's and is too poorly insulated. The danger here is that the idiot politicians, who don't number a technical person or engineer amongst them will plunge headlong into the electric solution and then realise a few years down the line that it doesn't really work. Guess who's going to pick up the bill.....

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