A leading industry expert from Tony Blair’s think tank has called on the Government to make major changes to the system of road taxation or the UK could see traffic levels spike.
There have long been calls for a massive overhaul of vehicle taxation to ensure all drivers are charged a fair rate to stay on the roads in the coming years.
Electric vehicles are the biggest change to the landscape of British roads in a generation and the Government is scrambling to address the need to charge motorists equally.
The Government has put in place measures to ensure that electric cars must pay Vehicle Excise Duty from April 2025, with Chancellor Jeremy Hunt saying it would make the tax system “fairer”.
The Government could lose up to £30billion in fuel duty revenue
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James Browne, Senior Policy Advisor at the Tony Blair Institute for Global Change (TBI), warned that new forms of road pricing were needed to prevent “gridlock Britain” from becoming a reality.
A previous report from the Tony Blair Institute estimated that congestion would get “rapidly worse”, with the UK potentially seeing a rise in traffic of up to 50 per cent.
It warned that this would have a huge cost, not only on the economy with road repairs and emissions, but also as a massive hit to the quality of life of drivers.
Browne added: “It’s good we are seeing electric vehicles on the road, and the Government should be supporting the transition to carbon-free transport.
“Part of that transition, though, needs to be action to address congestion.
“If we don’t act to reform motoring taxation now, we risk soon seeing too many cars out and about, with longer delays and higher road maintenance bills.”
Over the next decade, the Government will see around £25billion of revenue from fuel duty dwindle away as the number of petrol and diesel cars on the road falls.
While internal combustion engine vehicles are expected to remain for decades to come, some experts have warned that fuel duty receipts will drop, creating a “black hole” of cash for the Government.
The TBI forecast that the Chancellor would be forced to put up taxes in other areas, equivalent to up to 2p on income tax by the end of the next Parliament and up to 6p by 2040.
James Browne added: “With fuel duty fading as a source of revenue, the Government needs to set out a plan for moving towards road pricing as soon as possible.
“This needs to happen urgently, before too many people buy electric vehicles on the basis that they will not be taxed, making it impossible to introduce it later.”
According to the Office for Budget Responsibility (OBR), the Treasury’s tax take from fuel duty will fall from £25.1billion in 2022/23 to zero by 2050.
Revenue from fuel duty could be maintained by the Government for slightly longer after Rishi Sunak delayed the deadline to ban the sale of new petrol and diesel cars from 2030 to 2035.
Colin Walker, head of transport at the Energy and Climate Intelligence Unit, said: “It would be kind of political suicide really for either party to stick their head out and say we want to talk about road pricing.
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Experts are warning that congestion could get worse in the coming years
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“The longer you leave it, the larger the number of people who’ve got used to the cheap cost of driving EVs that you potentially p*** off,” he told The Telegraph.
