Rachel Reeves has been met with strong criticism amid plans for the Chancellor to introduce pay-per-mile car tax changes in the Budget later this month.
Reports suggest that the Government will look to launch a 3p per mile charge for electric cars to raise money for the Treasury as drivers ditch petrol and diesel vehicles, and fuel purchases decrease.
Estimates suggest the Government could be left with a £30billion financial black hole from a drop in fuel duty receipts over the coming years.
Road pricing measures, which includes pay-per-mile car tax changes, have been suggested as a suitable solution for many years, although support for such a scheme has been mixed.
The Government has admitted that a “fairer” system of motoring taxation is needed for all motorists, regardless of what vehicle they drive.
GB News has rounded up the most prominent reactions to the plan to introduce pay-per-mile car tax changes.
Chancellor Rachel Reeves looks set to launch pay-per-mile car taxes in the upcoming Budget
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GETTY/PA
How has the industry responded?
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), described the plans as “entirely the wrong measure at the wrong time”.
He cited the growth in electric vehicle sales, noting that it was a pivotal moment for many who are interested in switching away from petrol and diesel vehicles.
“Introducing such a complex, costly regime that targets the very vehicles manufacturers are challenged to sell would be a strategic mistake – deterring consumers and further undermining industry’s ability to meet ZEV mandate targets, with significant ramifications for perceptions of the UK as a place to invest,” Mr Hawes said.
The expert suggested that the Government should instead communicate with the industry to create a system that works efficiently for all involved.
Other experts have criticised the Government for not consulting with the industry on the best way to introduce the measures, without hampering the uptake of cleaner vehicles.
Paul Barker, editor at Auto Express, said a pay-per-mile scheme was inevitable, but stressed that it could have a disastrous impact on people ditching their petrol and diesel cars.
He said: “Petrol cars will be on the road for many, many years to come, but every electric car sold is one fewer that’s visiting petrol stations and pumping money into Treasury coffers.
“Adding a ‘new’ tax to electric cars months after the announcement of the Electric Car Grant and with manufacturers labouring under Government targets for EV sales is likely to prove controversial but the rumoured 3p per mile rate for EVs would still be significantly less than ICE car drivers are paying in duty on fuel.”
The sector has suggested that if a pay-per-mile scheme were to be introduced, it should be rolled out alongside additional incentives for motorists who are making the switch to an EV.
Potential measures include slashing the VAT rate on public chargers from 20 per cent to five per cent to match home chargers, or even boosting funding for the Electric Car Grant.
Polestar criticised the planned car tax change
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POLESTARHave any brands responded to the plans?
Premium electric vehicle brand Polestar has blasted the potential proposals, with its UK managing director describing the plans as “farcical” in comparison to fuel duty rates, which have remained frozen since 2011.
He said: “Our Government should not be taking their focus off de-carbonising our roads, and this is a huge step backwards during a cost of living crisis, reducing confidence for many looking to switch.
“This is clearly a confused message from the Government, on one hand recently incentivising the move to zero emission driving with the Electric Car Grant and on the other planning to take this away with tax rises.”
What have politicians had to say?
Shadow Transport Secretary Richard Holden told GB News that Labour were launching a “tax grab” on motorists at a time when they were already facing massive motoring costs.
He added: “Britain cannot afford a Government that treats motorists as a cash machine to plug the holes in Rachel Reeves’ failed economic plans.”
Similarly, the Leader of the Conservatives in the London Assembly, Susan Hall, blasted the proposals, noting that she had warned of plans that were hinted at under Mayor Sadiq Khan in the capital.
“I feel so sorry for those who bought expensive electric cars thinking their running costs would reduce, only to be hit with pay-per-mile. But make no mistake, it will eventually be applied to us all,” she told GB News.
What have the Government said?
The Treasury has refused to comment on any speculation ahead of the Budget on November 26.
A spokesperson told GB News: “The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy.”
However, a Government spokesperson said: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles.
“We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.”