Plugging the gap? Different approaches to road pricing

Patrick Hall | 2nd June 2021 | Uncategorised

As EV uptake grows, so too does another headache for the government, writes Patrick Hall.

The UK government has been zealous in its pursuit of electric vehicle (EV) uptake. Banning the sale of petrol and diesel vehicles by 2030; pumping billions of pounds into the rollout of EV charging infrastructure; and providing fiscal incentives in the form of grants and tax relief for those who make the switch to an EV. The rationale behind the electric transition is clear: lower emissions and less air pollution. But as EV uptake grows, so too does another headache for the government. Late last year, it surfaced the Treasury was staring down the barrel of a £40 billion annual loss in revenue from fuel duty and Vehicle Excise Duty (VED) - of which EVs pay neither - as a result of forecasted EV uptake. This begs the question: how is the government going to make up this lost revenue? Drivers of petrol and diesel vehicles cannot be expected to make up for the annual loss in revenue by paying all the tax for using the road. Not only would this be financially unsustainable for fossil fuel m...

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