3 days ago
20
The announcement in the budget of the introduction of a per-mile tax on electric vehicles is an important start to reforming vehicle taxation to be fairer (Report, 26 November). But it is only the first step towards making it an effective tool to reduce traffic congestion and carbon emissions.
I provided written and oral evidence to the 2021 Commons transport committee’s inquiry into road pricing and have led a focus group on how it could be made acceptable to the public. Although a per-mile charge is relatively simple to administer, taxes on fuel are fairer because they vary with the weight and efficiency of the vehicle. These are relevant because they determine external costs, such as the rate of road wear, severity of harm caused in collisions, and carbon emissions. A tax on energy usage captures these external costs better than a tax on mileage.
There are currently two taxes on electricity: VAT and the climate change levy (at 0.8p per kWh). The problem with VAT is that the effective rate paid varies greatly: home chargers pay 5% (or nothing if charging from their own solar panels); users of public charge points pay 20% of a much higher tariff; and VAT-registered businesses can reclaim VAT paid (but not duty).
We need a tax applied not at the point of charging, which is practically impossible to regulate uniformly, but at the point of use. The solution is for EVs to log electricity consumption in addition to mileage. Both can then be reported (automatically or manually), cross-checked for obvious discrepancies, and the electricity taxed accordingly. That would be fair and relatively straightforward to implement.
Including VAT, the tax paid on petrol and diesel vehicles is approximately 7p per mile. To achieve tax parity, EVs would ultimately need to be taxed at about 23p per kWh.
Edward Leigh
Cambridge
I note with horror that the chancellor has introduced a 3p per mile charge for a selection of EVs. How is that wise or fair? It even applies if you take your UK registered EV to drive anywhere in the world.
It is more costly to run an EV if you rely on public charging. Owners now must pay vehicle excise duty. From next year they will also be liable to congestion charges.
So, the government is penalising domestic EV owners, who have followed government advice and are trying to do the right thing for the environment. How does that match up with Labour’s green commitments?
The fairest approach would be for all types of vehicles to pay this toll – and this should reflect the environmental impact of the vehicles. In principle, if a charge per mile is considered appropriate, then it should be raised on every road user, and the higher polluters should pay more. Their impact should be reflected in higher rates per mile.
David Abrams
Fareham, Hampshire
