The new Labour Party government may introduce a pay-per-mile car tax, potentially replacing vehicle excise duty (VED), which could result in higher costs for families, who are expected to "pay more" under the proposed system.
Pay-Per-Mile Car Tax Could Hit Families Hard, Experts Warn
If pay-per-mile expectations are correct, it implies an initial cost of £190 for families. According to Andrew Jervis, CEO and creator of driving specialists ClickMechanic, "families" are expected to be among the most affected, reports BirminghamLive.
Andrew noted that there are bound to be concerns about how this change will affect low-income households, especially those who rely on their cars for essential travel. Transport experts also argue that increasing taxes is necessary to help reduce traffic congestion, pointing out that motorists already lose one billion hours each year due to time spent stuck in traffic.
Calls for Pay-Per-Mile Tax Amid Revenue Loss from Fuel Duty
Paul Johnson, director of the Institute for Fiscal Studies and author of Follow the Money, a book focused on tax and spending policy in the UK, explained that without a shift in how driving is taxed, the country risks losing a significant amount of tax revenue.
He stated that the most logical solution would be to implement some form of road pricing, saying, “Unless we want to lose an awful lot of tax revenue, we’re going to have to move to some way of taxing driving and the obvious way to do that is some kind of road pricing.” “My view is that we need to do this relatively quickly. But obviously, that’s politically difficult.”
Fuel charge, which presently is priced at 52.95p per litre of gas, effectively taxes drivers based on the distance they already travel: the more you use your vehicle, the higher the fuel duty you pay.
Furthermore, petrol car drivers must pay VAT in addition to fuel duty and vehicle excise duty, generally known as "road tax". Auto Express asked HM Treasury if it intends to adopt a pay-per-mile road tax regime, but it declined to provide further information.
In its response, it stated: “We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”