As the United Kingdom government continues with its agenda to reduce emissions, it is looking to introduce toll roads. This is a mode of collecting tax from electric car drivers who do not pay fuel tax. Currently, UK ministers are looking into introducing a network of toll roads while discussing initiatives that will tax drivers.
Each year, fuel taxes account for 1.2% of the national income. The number is expected to reduce with the government looking to reduce emissions to net zero. Meanwhile for the first time in over a decade, Chancellor Rishi Sunak is expected to cut fuel duty during his Wednesday spring statement.
According to the RAC, there were 380,552 electric vehicles on UK’s roads last year. This was a 281,706 increase from 2019. Toll roads are seen as one way in which the government ensures that all drivers are taxed to cover for EV owners who do not pay fuel tax. An example of a road that users pay to use is the M6 located in the West Midlands. This toll road charges drivers £7.10 during weekdays and £12.90 for heavy trucks at certain times of the day.
According to a government spokesman, this initiative is one way that the government is committed to ensure that motoring tax revenues are up-to-date with the changes resulting from the transition to electric cars while maintaining affordability to consumers. Toll roads are a familiar encounter in European countries. France’s toll roads, for instance, accommodate a quarter of the country’s traffic. The high number is as a result of the fact they are privately owned whereas in the United Kingdom, the government is the one in charge of all public access roads.
One of the choices that the government is looking into is the introduction of tolls across motorway networks. Last month, the Commons transport committee pitched another option to integrate technology to charge drivers based on the distance covered, the traffic level and the type of vehicle.
EV drivers do not pay fuel tax because their cars do not require fuel. There are concerns about a backlash from the public and MPs in case such tolls are implemented on roads in towns and cities and not just along major routes.
Last October, the Treasury said the United Kingdom would probably look into coming up with new tax methods in order to cover for the revenue lost during the shift from fossil fuels. After Boris Johnson published his plan for lowering emissions to net zero, the Treasury said that the biggest impacts of the shift on public finances will come from permanent behavior changes, which will affect the tax system. The loss of significant amounts of tax revenues will be direct.
The introduction of road tolls targeting EVs can be a double-edged sword given that it can, to some degree, bog down the penetration of electric vehicles. Careful planning therefore needs to be done so that manufacturers such as Rivian Automotive Inc. (NASDAQ: RIVN) can get as many people on the EV train as possible before measures can be undertaken to regain the tax base eroded by the switch to electric mobility.
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