As cars switch from traditional combustible fuels to electric energy, governments are looking at alternative ways of raising funds.

The UK Treasury is thought to pocket in the region of £28bn in fuel duty from taxes added to the cost of filling up at the petrol pumps, but with the switch to EV motoring, much of those revenues will be lost and the Government is looking at ways to compensate for the lost funds.

One controversial scheme being proposed is a road toll scheme which will tax drivers for each mile they travel in their car. The study by Bloomberg News Energy Finance has claimed that Governments could look to reclaim 9p per mile to compensate for the lost revenues, and with the average driver travelling in the region of 7,800 miles a year, this could result in a £710 annual charge for drivers to pay.

The worry of lost fuel revenues is not just a concern for the UK government, Bloomberg’s study has shown that the major economies such as the US, Germany and China could see a collective loss of up to £1.4trillion as the trend for EV increases.

Though the UK government has promised a ban on sales of petrol and diesel powered vehicles by 2040, there is still to be a clear understanding of how to recover lost tax revenues. The study by Bloomberg suggests that the mileage based charge for drivers could be introduced incrementally to soften the blow for drivers.

It’s not the first time that mileage taxes have been proposed by a government, previous Labour administrations had suggested taxing drivers up to £1.34 a mile to use motorways at peak times. However the plans were widely campaigned against and more recently the AA president Edmund King has described road pricing schemes as ‘political suicide’.

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