Currently reading: MPs call for road use tax to replace fuel and excise duty
As EVs replace petrol and diesel cars, MPs raise concerns about the impact on public finances

The Commons Transport Select Committee has called on the government to look at new taxes as people switch out of petrol- and diesel-powered cars, suggesting a tax based on miles travelled.

This would use “telematic technology” to charge drivers according to distance driven, vehicle type and congestion. The committee called on the government to start an honest conversation with the public, saying that new taxes must entirely replace the existing set-up, rather than being in addition to, and also be revenue neutral. Motorists should pay “the same or less than they do currently”.

The total revenue from the existing structure of fuel and vehicle excise duty is £35 billion pounds a year. The committee stated that this is worth 1.5% of UK GDP, or 4% of overall tax receipts in 2021/22.

Neither tax is levied on electric vehicles, so as sales of these increase, the committee has warned that revenue could fall to zero by 2040.

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