Road Tax Exemption for Electric Cars ‘Unfair and Fiscally Unsustainable’
18 July 2024
SUGGESTED
In the Media
Government and Institutions
Matthew Lesh writes for City AM
18 July 2024
Economic Theory
11 November 2024
Daniel Freeman writes for The Times
IEA Managing Editor Daniel Freeman has written for The Times arguing in favour of extending road tax to electric vehicles.
Daniel wrote:
“Electric vehicles are not subject to road tax or fuel duty. This is both unfair and fiscally unsustainable. Road tax raises more than £8 billion a year and fuel duty a further £25 billion. If all motorists switched to electric vehicles, there would be a massive loss in revenue — a hole in public finances equivalent to over half the defence budget.
“Without reforms of the tax system, this policy will further undermine the government’s fiscal position to benefit the better-off who buy electric cars in far greater numbers. Extending road tax to them is an essential first step to filling the gap…
“But this should only be the start. The government should develop a road-pricing system to replace the lost revenue as more drivers switch to electric vehicles. A flexible system where you pay based on congestion levels would encourage a more efficient use of limited road space, especially in larger cities, and reduce journey times during rush hour. Those in less congested areas, particularly outside London, or who are willing to travel at quieter times would pay less. It could also factor in the environmental and maintenance costs of road use.”
Read his full piece here.
Daniel wrote:
“Electric vehicles are not subject to road tax or fuel duty. This is both unfair and fiscally unsustainable. Road tax raises more than £8 billion a year and fuel duty a further £25 billion. If all motorists switched to electric vehicles, there would be a massive loss in revenue — a hole in public finances equivalent to over half the defence budget.
“Without reforms of the tax system, this policy will further undermine the government’s fiscal position to benefit the better-off who buy electric cars in far greater numbers. Extending road tax to them is an essential first step to filling the gap…
“But this should only be the start. The government should develop a road-pricing system to replace the lost revenue as more drivers switch to electric vehicles. A flexible system where you pay based on congestion levels would encourage a more efficient use of limited road space, especially in larger cities, and reduce journey times during rush hour. Those in less congested areas, particularly outside London, or who are willing to travel at quieter times would pay less. It could also factor in the environmental and maintenance costs of road use.”
Read his full piece here.
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