Government urged to introduce pay-per-mile driving tax

It's claimed the proposals would have public support

The brains behind the proposal are the Campaign for Better Transport (CBT), who have claimed the plan would have public support. The charity has suggested people already a driving a zero-emission vehicle before the implementation date would be exempt, encouraging people to switch to electric.

Currently, taxes on petrol, diesel and other fuels generate around £25 billion a year in revenue for the Treasury.

But as more and more people switch to zero-emission vehicles, that figure will go down.

One of the ideas to combat this is introducing per-mile charges on vehicles, but governments have so far reckoned this would be too unpopular amongst the electorate.

The CBT has said their proposal could help chancellor Rachel Reeves deal with a "looming black hole," LBC reports.

CBT director of policy and campaigns Silviya Barrett said: "The new Chancellor faces a looming black hole. She can avoid it, in a way which is fair and which garners broad public support. But she should start now, as this issue will only get more pressing.

"It should be cheaper to drive a zero-emission vehicle than a more polluting vehicle, but it's only fair that these drivers should pay a share, and a pay-as-you-drive model can achieve this."

In a letter to the chancellor, Barrett said "ZEV drivers should fairly contribute towards vehicle taxation."

She continued: "We fully appreciate that such a change would be perceived as difficult and criticised by the opposition and by certain representative groups.

The group said its research found that 65 per cent of the public believe it is fair for electric vehicle drivers to be taxed, but at a lower rate than petrol and diesel drivers.

The CBT is leading a forum of 37 organisations supporting reform, including motoring and other transport industry bodies.

This includes the RAC, which has supported the proposals for a "pay-per-mile system."

Their head of policy Simon Williams said: “With fuel duty revenue set to fall further as more electric vehicles come on to the road, a replacement form of taxation needs to be introduced to avoid losing billions.

“A pay-per-mile system could be set up according to vehicles’ emissions with EV drivers paying the least to further encourage take-up and ‘gas guzzlers’ paying the most. We believe the Treasury needs to get moving on creating this new system sooner rather than later.”