Source · Select Committees · Transport Committee
Recommendation 1
1
Paragraph: 7
Fuel duty and vehicle excise duty raise some £35 billion a year.
Conclusion
Fuel duty and vehicle excise duty raise some £35 billion a year. Approximately 20% of that revenue is disbursed on maintaining and developing the roads. Neither fuel duty nor vehicle excise duty are currently levied on electric vehicles. The Government is phasing out the sale of petrol and diesel cars by 2030. Under the current system of fuel duty and vehicle excise duty, that policy will reduce tax revenues obtained from motoring to zero over the next 20 years. Without radical reform, policies to deliver net zero emissions by 2050 will result in zero revenue for the Government from motoring taxation. A failure to replace existing motoring taxes with an alternative road charging mechanism will lead to either decreased investment in public services, including road maintenance, or increased Government borrowing.
Paragraph Reference:
7
Government Response
Acknowledged
HM Government
Acknowledged
As the Government’s Net Zero Strategy set out, as we transition to net zero, the government will need to ensure that the tax system encourages the uptake of EVs, and revenue from motoring taxes will need to keep pace with this change, while remaining affordable for consumers. This is so we can continue to fund the infrastructure and first-class public services that people across the UK expect, and avoid a rise in congestion, with those able to drive electric vehicles having very low running costs compared to other vehicles and public transport. That would affect everyone on the road and those using public transport. Our tax system has already begun to adapt to this transition. As I set out at Autumn Statement 2022, it’s right that all motorists start to pay a fairer tax contribution. That’s why, from 2025, electric cars, vans and motorcycles will pay Vehicle Excise Duty in the same way as petrol and diesel vehicles.