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Electric vehicle road tax. The Tony Blair Institute urges for a rethink - is this sensible?

Electric vehicles are already hitting headlines in 2024 with the latest article in the Telegraph referencing The Tony Blair Institute, who are once again calling for a change in road tax on EVs in the UK. Here is what you need to know:

 

  • Petrol and Diesel Financial Gap: The Institute believes that revising the road tax on electric cars can help address the Treasury's financial gap of £25bn to £35bn. 💰

  • "Road Pricing": One of the proposals suggested to generate this tax income is the introduction of road pricing or pay-as-you-drive schemes 🛣️ This would charge drivers based on the miles they cover and will help to relieve congestion by incentivising more people away from driving long distances.

  • A warning: To ensure that EVs remain cheaper to own and operate than petrol cars, the road pricing scheme must be designed in a way that continues to encourage people to transition to EVs 🚗⚡

 

The Tony Blair Institute pushed for this in their 2021 report Avoiding Gridlock Britain. In short, they argue that because EVs will be significantly cheaper to run, more people will be able to drive and therefore, congestion will be worse;

 

"The cost of petrol, fuel duty and Vehicle Excise Duty (VED) is around £1,100 per year for the average petrol or diesel car; the equivalent cost for an electric vehicle is just £320. And while the overall cost is 71 per cent lower, the amount paid in tax is 98 per cent lower.", "With a collapse in the marginal cost of driving we can expect the amount of time we waste in traffic to rise by up to 50 per cent".

 

Do I agree?

Not really - the Institute's figures are obviously out of date in the 2021 report but James Browne, a senior policy adviser, does seem to keep pushing the argument that cheaper driving will result in more cars on the road. What he fails to acknowledge is that when charging an EV at home, the cost per mile is significantly lower than petrol/diesel but when charging commercially on long journeys it is equivalent to or more than petrol/diesel in some circumstances.

 

My key takeaway?

Something that did strike me in the Avoiding Gridlock Britain report, was that over the next 15 years, wealthier people will adopt EVs first because they make up the vast majority of the new car market. This will leave wealthier people enjoying the tax breaks and lower travel costs whilst lower-income households will be left to pay high road tax on petrol and diesel cars and potentially pick up the tab on the missed road tax revenue. This is a strong argument for introducing road pricing/pay-as-you-drive model to road taxing.

 

Are you considering getting an EV and do these sorts of ideas put you off?? 🚘 🚨 Get in contact with us and share your thoughts on the road tax revision for EVs, and let's discuss the future of electric cars together! 

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