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Drivers could pay the price for £40bn tax shortfall
17 November 2020
Following Prime Minister Boris Johnson’s announcement on November 14 2020 of plans to ban the sale of new petrol and diesel cars starting from 2030 onwards, the government faces a £40bn shortfall on fuel duty and car tax.
At present, motorists pay 57.95p in fuel duty per litre of petrol and diesel they buy. In total, the Treasury reaps £28 billion a year from this charge according to the Institute for Fiscal Studies.
VAT on fuel currently generates an additional almost £6billion a year, and Vehicle Excise Duty (VED) - which is charged on the purchase of cars based on their emission levels - is expected to raise £7.1billion.
Chancellor Rishi Sunak is said to be considering plans to charge motorists for every mile they drive on UK roads, in fear of the financial impact on the Treasury following the UK’s switch to electric.
In 2007, the Labour party suggested a similar scheme in which drivers would be charged up to £1.50 per mile. Though, this proposal was quickly dismissed after almost two million motorists signed a petition against it.
Just two years later, in 2019, another similar scheme was proposed again by The Climate Change Committee, led by former CBI chief Lord Turner, which said it wanted ministers to introduce compulsory road pricing to prevent global warming.
Edmund King, president of the AA said had said such a move would be “political suicide for any party”.
According to Metro, speaking on these latest potential plans for charging motorists, King said, “While the push toward electric vehicles is good for the environment, it is not good for the Exchequer.”
“The Government can't afford to lose £40bn from fuel duty and car tax when the electric revolution arrives.
“It is always assumed that road pricing would be the solution but that has been raised every five years since 1964 and is still perceived by most as a "poll tax on wheels".
“We need a more imaginative solution and have proposed "Road Miles" whereby every driver gets 3000 free miles, with one third more for those in rural areas, and then a small charge thereafter.
“Combined with commercialising the roads with an adopt-a-highway scheme with naming rights such as the Minecraft M1, Manchester Utd M6 or Adidas A1, this should be proved a more popular solution”.
We at Marshall Leasing are always keen to keep our customers updated with the latest motoring news. If you would like to know more about our car leasing and driver services, please get in touch on 01480 414541 or email info@marshall-leasing.co.uk.
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