Could We Be Facing ‘Poll Tax On Wheels’?

Tue 23rd Feb 2021

With new research revealing that every new EV bought in the UK could be costing the government up to £1,000 a year in lost taxes - there are warnings from motoring organisations over plans to make up the shortfall in revenues.

While electric vehicles are currently promoted as a greener and more efficient option for motorists, with low emissions accompanied by low taxes as an incentive - that honeymoon period for the EV is likely to end soon. One of the proposed alternatives for the revenue created by fuel tax is to tax each driver on their annual mileage, ensuring that the promise of electric being cheaper is wiped out.

The RAC Foundation has found that the savings made on an EV compared to a petrol could be as much as £592 per year in excise and VAT, and £305 in showroom tax, with more savings if you switch from a diesel - more than £1,000. With more than 175,000 EVs expected to be sold in 2021 alone, that could cost the chancellor £200 million in lost revenues.

Now the UK’s biggest motoring organisations are warning to expect to pay by other means sooner or later.

“In the face of a big decline in revenue, the chancellor could decide to turn off the money taps and start to tax EV drivers rather than subsidise them,” said Steve Gooding, director of the RAC Foundation. “For those buying battery-powered cars on the premise of cheap motoring, that will be a huge shock.”

Meanwhile, Edmund King, president of the AA said: “Alarm bells will be ringing in the Treasury because electric cars will outnumber diesel cars on the roads within nine years. When fuel duty runs dry, the government will look at pay as you go. Traditional road-pricing could backfire as a poll tax on wheels, so [we] are advocating a system of road miles, whereby every driver gets at least 3,000 free miles before charges are introduced.”