Report Calls for Drivers to Be Taxed on a Per-Mile Basis

Traffic along the M3 motorway near to Winchester in Hampshire, England, on Aug. 23, 2019. (Andrew Matthews/PA Media)

Drivers should have direct charges on-road to overhaul the UK’s motoring taxation system, according to a report.

The centre-right think tank the Centre for Policy Studies (CPS) is urging a pay-as-you-drive scheme in the UK, which should initially apply to zero-emission vehicles (ZEVs) before being expanded to cover all vehicles.

The think tank, co-founded by former Prime Minister Margaret Thatcher, says it has a “proud record of turning ideas into practical policy” and that it has also “led the way in developing market-based approaches to reaching Net Zero.”

The Future of Driving report (pdf) said that the road pricing scheme would replace the “outdated and onerous tax system” of fuel duty and vehicle excise duty.

It claimed that the Treasury faces a “£25 billion fiscal black hole” as annual receipts from fuel duty are reduced, with motorists switching from petrol and diesel cars to electric models.

Fuel Duty

Fuel duty and vehicle excise duty raise some £35 billion a year. Twenty percent of that revenue is disbursed on maintaining and developing the roads, though neither fuel duty nor vehicle excise duty is currently levied on electric vehicles.

However, the government is phasing out the sale of petrol and diesel cars by 2030, and ending the sales of all new petrol and diesel-powered cars and vans by 2040. The government has an ambition for “half of all journeys in towns and cities to be walked or cycled by 2030.”

The report said that under the current system of fuel duty and vehicle excise duty, that “policy will reduce tax revenues obtained from motoring to zero over the next 20 years.”

A number plate is put on a Nissan electric car at a dealership in Northampton, England, on Aug. 5, 2022. (Blackball Media/PA)

It said that at its most basic level, every “driver would be taxed at a set pence per mile rate. At the end of the month, you would simply multiply the miles driven by the fixed rate to give the total charge.”

It wrote that a central element of the “promise” of a per-mile charge should be that “EV drivers will pay significantly less in tax than their petrol and diesel counterparts.”

“This will be in keeping with the spirit of carbon taxation, providing an economic nudge to switch to lower emission modes of transport,” it added.

The report suggested that the new per-mile system “should be accompanied by a free mileage allowance above which the charges kick in, allowing for differentiation based on geography, while also adding a subtle nudge to reduce car usage.”

Cars queue at Tesco near Stanwell, Middlesex, England, on Sept. 27, 2021. (Steve Parsons/PA)

To avoid privacy concerns, the report said that this national scheme should be based solely on the number of miles driven, irrespective of location or time.

It acknowledged that some drivers are “wary of the state tracking their movements constantly,” and suggested charges should be paid by a monthly direct debit, with no recording of where and when road users drove.

The report said that government could announce that the new system will apply to all ZEVs “towards the end of the decade.”

Dillon Smith, CPS energy and environment researcher and report coauthor, said the recommendations “can lead to fairer, better and more efficient taxation while tackling congestion and improving air quality in our big cities.”

Tom Clougherty, CPS research director and coauthor, added, “We shouldn’t replicate the old, punitive tax system, but it is still important that all drivers pay a fair amount for the roads they use.”

Road Pricing

During a protest in April against London Mayor Sadiq Khan’s plan to extend the Ultra Low Emissions Zone (ULEZ) to the outer limits of the capital, some believed that the scheme was more about “advanced road pricing” than air pollution-cutting.

According to a Freedom of Information request, there are 1,400 cameras used for ULEZ enforcement that can read number plates and check vehicle compliance.

A sign at the expanded boundary of London’s ULEZ pollution charge zone for older vehicles on Oct. 25, 2021. (Yui Mok/PA)

At the time, a mayor of London spokesperson told The Epoch Times that the technology required to replace existing road charges with a single scheme “is many years away.”

However, according to a House of Commons Transport Committee report on the matter, “various forms of road pricing operate successfully across the world.”

Professor Phil Goodwin, senior fellow at the Foundation for Integrated Transport, said, “Anything that, politically, is realistic to design […] the technology can deliver already.”

‘Anti-Driver Policies’

Howard Cox, founder of FairFuelUK, told The Epoch Times by email that the CPS report still shows “underlying anti-driver policies” and an acceptance that “EVs will rule our road transport choices.”

Cox, who campaigns for lower fuel prices and reducing the tax burden on motorists, argued that the report “lacked the moral courage” to recognise that EVs, from cradle to grave, are “more polluting than the internal combustion engine” and that “our air quality has never been better.”

There is an ongoing debate about whether EVs or petrol cars pollute more. While EVs emit no tailpipe emissions, it is only as clean as the power it uses to keep it moving.

In 2021, Jarod Cory Kelly, principal energy systems analyst at Argonne, told Reuters that making EVs generates more carbon than combustion engine cars, “mainly due to the extraction and processing of minerals in EV batteries and production of the power cells.”

Howard Cox, founder of the FairFuel UK campaign, in London, on April 5, 2023. (NTD)

“Instead of just focussing on the green worshipped subsidised EV being the only choice of road transport, other clean fuel technologies must be commercially encouraged, to include new Euro 7 and 8 development standards. That in itself, would allow the much-loathed un-consulted diesel and petrol 2030 new car sales ban to be dumped, preventing a predicted economic catastrophe from taking place,” said Cox.

He said that the CPS doesn’t address that “road charging stinks of big brother technology and the government’s blatant push to control our private lives.”

“Since 2010 I have been banging on for a practical long-term road user strategy that’s both equitable in terms of taxation and more generous road investment. The CPS is right about seeking fairer taxation but fails to address the core issue that fossil-fuelled technology is still the most sensible, reliable, and tax efficient way for decades to come,” he added.

Cox said that with “generations of demonised drivers being used as cash cows,” it’s time this “government was told by think tanks like the CPS to invest in our roads infrastructure through hypothecating tax spend not as the usual chronic reluctant afterthought.”

Dillon Smith, CPS energy and environment researcher and co-author of The Future of Driving report, told The Epoch Times by email: “It’s important to be clear, we’re not proposing national congestion charging so our proposals do not require any evidence of where and when a person drove, just the mileage. We suggest this can be done very simply, as in Australia, with a photograph of a car’s milometer submitted monthly and checked against yearly MOT records.

“If some drivers are comfortable with in-vehicle technology which takes away the need for manual readings then this could be designed with relative ease, especially as new cars have more technology built in from the start, but we are very clear this should be a choice and that manual, tracking-free system should always be available. Our proposals simply mean EV drivers would pay their fair share for the use of the roads, in the same way petrol and diesel drivers pay fuel duty today.”

A Treasury spokesperson said: “We are making sure that motoring tax revenues keep pace with the switch to electric vehicles, whilst keeping it affordable for consumers, and have no plans to introduce road pricing. With the EV transition accelerating, it’s right that all drivers start to make a fair tax contribution through changes to Vehicle Excise Duty but we continue to support the electric vehicle revolution through over £2.5 billion in incentives.”

PA Media contributed to this report.