UK Concerned EVs Will Cut Funding: Ponders New Fee Strategy

OCT 28 2018 BY MARK KANE 60

They will tax us one way or another.

As electric cars in the UK gain popularity, so returns the topic of how to finance the maintenance of roads.

Currently, most funds come from fuel duty (£28.3 billion expected this financial year in the UK), but all-electric cars are not using fuel (plug-in hybrids uses much less than ICE).

“So what will happen when we’re all humming about in electric vehicles?”

In other words, it’s inevitable that the fuel duty will disappear over time and countries will need to switch another way to collect taxes from those who use roads.

Because a tax on electricity for charging cars seems difficult, as people would try to avoid it through a separate circuit for home appliances, the simplest idea seems to be a tax proportional to mileage.

The change probably will need to be performed well before fuel duty revenues will collapse in 10-20 years.

According to Autocar’s article, the “think tank Policy Exchange estimated last year that the government could lose up to £170bn by 2030 by allowing electric cars to slip through the duty net”.

The replacement road pricing probably will have some free credit like 3,000 miles annually, at least in the beginning, to make the switch smoother. Politics are afraid that road pricing is a poll tax on wheels and introducing it will be a suicide for them.

““Given that mileage is already recorded for MOT purposes, it seems entirely logical,” said Tom Callow, director of strategy at electric charging firm Chargemaster. It also works on the same principle as fuel duty: drive fewer miles, pay less duty. The problem with road pricing is that it has traditionally proven to be incredibly unpopular.”

Source: Autocar

Categories: General

Tags: ,

Leave a Reply

60 Comments on "UK Concerned EVs Will Cut Funding: Ponders New Fee Strategy"

newest oldest most voted
Sammy

Charging by the mile is not a vote winner so IMHO it would be a brave government who tries it. But, something has got to give. I’d be happy if there was a flat fee based upon the average miles travelled.
However, what happens if you take your car to Southern Spain? Could the UK Government charge you for travel outside of the UK? That would not be acceptable.
Then there is N. Ireland and the border with Eire. People go back and forth all the time.
Charging only on the miles done since the last MOT test is IMHO very, very heavy handed.

OtteryLexa

Some very good points.
Perhaps charging by curb weight is the answer.

G2

Exactly since the weight of the vehicle is directly related to how much wear it does to the road.

Do Not Read Between The Lines

It’s more a matter of axle weights relative to the load-bearing weight of the road, with a disproportionate effect from excess weight. Light vehicles are pretty much one and the same.

antrik

Highways already get explicit tolls in most of Europe. For local roads on the other hand, weather probably makes for more damage than the vehicles travelling them… So weight is actually of limited meaning in determining fair contributions to road maintenance I think.

Milfan

Charging by curb weight is certainly simple and can be a starting point.
A company called Weigh in Motion has built a scale near the toll gate that can weigh as the vehicle rolls over the sensors and this will help identify the vehicle’s gross weight at that time. Those who carry cargo could double the vehicles weight and is liable to pay more taxes. Those who carry trailers should pay for the trailer as well.

SteveSeattle

I an driver fills their petrol tank before crossing a border are they not paying tax in one country and using roads in another?
There could be a mechanism for those taking their vehicles out of country for extended periods. Perhaps a voluntary mileage check at the border?

Do Not Read Between The Lines

A bit of an overhead but I reckon that if governments shifted to odometer-based fees, they’d come up with a standard for odometers to make them easier to read. Or maybe something they’d encode in V2V communication.

Do Not Read Between The Lines

Borders have long been a problem for fuel duty as well, because people who regularly cross the border will buy fuel on the cheap side of the border.
Longer term they could try and figure out some revenue sharing.
Inappropriate flat fees just subsidize and encourage extra use and would tend to raise the average.

antrik

I don’t think the corner case of people travelling out of country really makes for a meaningful argument…

Tid

In the USA each state charges their own fuel taxes on top of the federal level tax, and there is a wide range of tax rates. For example, the fuel tax in Pennsylvania is almost 6 times higher than in Alaska. Crossing state lines is not a border case for many people who live near state borders. There is also a lot of travel between USA and Mexico and Canada.

antrik

As long as travel goes both ways, it doesn’t really matter in the end…

Do Not Read Between The Lines

The particular mention was Northern Ireland and people crossing over to the Republic of Ireland.

https://www.irishnews.com/news/northernirelandnews/2018/09/27/news/more-than-45-million-vehicles-crossing-border-between-north-and-the-republic-annually-1444515/

Apparently 36M border crossings in cars there last year. (Assuming stats were correct.)

Tid

The GPS present in every EV should make it possible to determine how many miles where traveled inside the country where the car is officially registered.

Sammy

Big Brother would love you (and divorce lawyers…)

Do Not Read Between The Lines

Still OK for commercial use, but not going to be accepted for private vehicles.

GE

Maybe a tire tax should be considered.

Do Not Read Between The Lines

I think tire wear depends on too many different factors. There are reasons to have one anyway, but not the best way to price roads.

antrik

While it depends on many factors, I think it not actually unreasonably to assume a strong correlation with road wear?…

Do Not Read Between The Lines

Lots of different tires with different life spans.
And different road surfaces will affect the life as well.
Like fuel tax, but even worse I’d think.

Mick Jones

Most likely would be to introduce tolls for motorway and cities, that way you also get to tax the European lorries entering the UK.

antrik

While road tolls are obviously the most direct solution, they tend to be pretty intrusive…

Matt

Electronic tolls are fluid / effortless once setup… provided they accumulate in an account that you pay once a year or whatever. Not get fined every time you forget! Ie. Mersey Gateway Bridge grr

antrik

Yes, they can be made quite effortless — but that generally requires huge privacy intrusion.

Maybe it’s possible to design a system that somehow solves both issues at the same time — but I haven’t seen one proposed yet…

Threader

If the goal is to discourage ICE and encourage BEV then as a temporary measure they should simply increase fuel taxes. The system is already in place.

Dave100e

That’s an excellent idea! Lets start by punishing the poor, the people who can’t afford to upgrade to an EV for at least another 10 years. Perfect!

Mark.ca

So the poor should get a pass on pollution?

Tid

Yes, they should, and the international treaties reflect that by giving poor countries a break on greenhouse gas emissions. Should the wealthy be exempt from paying for road maintenance?

antrik

No, the international treaties give the poor countries a partial break on *increasing* pollution from current low levels, while still requiring them to remain *way below* the wealthy ones.

Paul Smith

Used EVs will soon become more available and cheaper. The rate of improvement will lower older EVs resale value as they become more common.

Do Not Read Between The Lines

That does the opposite of solving the road pricing problem.

antrik

He said “temporary measure”…

Do Not Read Between The Lines

The better it works, the more you have to raise it to make up for lost income.

ekutter
It has to be per mile in some way rather than just based on vehicle weight or value. You can’t be taxing the person doing 10k miles the same as someone doing 50k miles. Clearly there are issues with people driving out of region or tourists driving on the local roads, but those are small compared to the difference between low mileage drivers and high mileage drivers. You already have big discrepancies with ICE cars. The car getting 15 mpg isn’t doing 3 times the damage to roads as the one getting 45 mpg. Nor are they taking up 3 times as much of the road way. You also have cases where someone fills up on one region drives to another and back before fueling up again. So it’s not like the current system with fuel tax is perfect either. The most accurate way would be some combination of vehicle weight and exact route traveled but I definitely don’t want GPS data being sent to any one, although my phone company probably already has it. Toll roads also aren’t going to work. It’s easy to do for major highways, but no way you can do it for all the city… Read more »
G2

This is part of the LICE FUD strategy, since fuel taxes are not the only means of paying for roads. Don’t let the bastards create false dichotomies.

Dave100e

The UK government makes considerably more from fuel duty (which is a tax on an already taxed product) and VED than they would ever actually spend on the roads.

This has nothing to do with actually paying for using the road or FUD and everything to do with the government losing money.

Do Not Read Between The Lines

It’s just a pricing problem to be resolved.
The FUD is suggesting that EVs aren’t paying their fair share.
The reality is that the pricing needs to be fixed.

Quiviran

Seems like a simple RFID tag, similar to a Turnpike Pass, installed in every vehicle that could report to a mesh of readers, installed statewide or nationwide, when the vehicle passed a certain point on the mesh. That data could be used to estimate distances driven on the roads and calculate a monthly bill for the vehicle owner. Not tied to the driver, in the age of car sharing and ride hailing. Failure to keep current with billing would result in car immobilization.

Do Not Read Between The Lines

Oh, yes, that’s going to fly.

Kenneth Bokor

Disagree. Take funds out of the home charging bills for registered EVs and owners that charge at home. Also take some funds out the public charging carriers by a sales tax – which I think is already done.

If I charge at home, I am already paying various taxes Federally, Regionally and Municipally and some of these funds at these levels are used for infrastructure needs. Plus I’m already paying tax on my energy bill at home, so if some of that energy use is coming from charging an EV, then I am already contributing to these needs.

For fueling your car, there is no consumer or home portion anywhere in that process since no one has a gas station at home. So I can see the reasoning behind the petrol taxes, plus its a cash cow for the governments like booze and smokes are too. And I would be highly critical of actually how this gas tax money is actually being spent because I would guess it’s being squandered on other things not directly related to road, bridges and other repairs that effect a car on the road!

Milfan

Miles, weight and where driven has to be factored. Currently a Chevy Suburban owner buys twice the amount of fuel as a Chevy Spark owner and making a flat fee means both of the pays the same tax which is not fair when the 2.5 ton (5,500 lb) machine puts double the amount of pressure on roads than the 1.1 ton (2,500 lb) machine.

Similarly where the vehicle drives should also be factored since a person who lives in New York could travel more miles in New Jersey damaging that states road, but paying taxes to New York is not fair. So where its driven should the recorded and the tax should be shared accordingly between states / countries.

A person buying an electric vehicle is certainly a rich person and may have 2 vehicles in his family and will mostly drive with his EV wherever possible because its cheaper and should not escape from his share of tax especially with his vehicle weighing more.

For 8 years, EV owners enjoyed subsidies and tax free driving and EV sales were very low, but now its accelerating and time for them to pay and this includes me for driving Nissan Leaf.

Do Not Read Between The Lines

Stop with the “EV owner is rich” stuff. The wealth of owners is immaterial.
That EV owners need to pay is obvious. The challenge is figuring out the best alternate pricing system, especially given the transitional problem, and the politics of pollution taxes.

G2

EV owners pay taxes on their power bills and at public chargers, so stop the FUD.

Benedictus

Is electricity not taxed in the UK?

OtteryLexa

Of course it is, but not to nearly the same degree as petrol.

And if you have solar, you could be paying nothing for powering your vehicle. That’s not a problem now, when EVs are single digit percent of the market and even less of the fleet, but when they are becoming near to equal, which could happen within a decade, the government will have to shift from incentivising EVs to taxing them to maintain the infrastructure.

The timing of the shift will be crucial. They should hold off as long as possible (I fear that they won’t), and escalate the taxes on fossil fuels (Carbon Tax), so that the incentive is still there.

antrik

FWIW, solar self-generation is being taxed in Germany.

(Not saying it’s a valid approach…)

Nemo

Actually, the simplest thing would be to simply pay for road maintenance out of the general budget, rather than insisting on relying on a separate (and effectively regressive) tax dedicated to the purpose.

Do Not Read Between The Lines

That’s simple. And like most simple solutions, a bad one.
In effect, you end up subsidizing driving, which just means added cost.

It’s probably not that regressive given that poor people are the least likely to own a car and less likely to drive for leisure.

KM

all European countries have a tax on electricity.
– admitedly less than fuel duty but it is there. also as more and more electricity comes from renewable sources there will be a lot more installation jobs which will be taxed. UK has the biggest offshore wind potential in Europe and the industry could support more if electricity was exported. This is an opportunity for UK and other countries to improve their trade balance.
The gap caused by EVs could easily be closed by reforming the pensions system which allows the richest 1% to reduce their taxes massively by putting vast amounts in the pension pots. If I remember correctly it costs UK 38 bln a year- a lot more than income from fuel duty. Add to that the taxes avoided by internet retailers based in tax havens and it all adds up to vastly bigger sums than the fuel duty.

Erwin

It should be directly proportional to motor’s power.

antrik

How is that fair?

101101

A reduction in petrol subsidies is the obvious immediate way to fund this and increase that reduction year after year. After that it becomes a tax on AV fleet operators.

But it musr not be used to shield fossil fuels in any way, they get the losses they’ve earned and deserved- no futher socializing any of there bs.

Tess1988

What about a tax based on the percent of the recommend cost of the car and then it could be paid again every year for example 1%

antrik

That would put a disproportionally high tax on people driving less.

Do Not Read Between The Lines

If you’re going to do that, you saying it’s a public good and should use general taxation.

If you price it, you price it independent of income and adjust minimum incomes to the price.

Bolt driver

This is a problem in most countries. The US will have the same problem and has already had an effect from more efficient vehicles using less fuel. The legislature should have raised the fuel tax when prices went from $5/gallon to $2.50/gallon. People would have never noticed and it would have helped fix the roads which are crumbling. It would also help create a push to ev’s in the long term.

IMHO it should be a yearly fee based on gvw and miles. The problem is how to track miles. People could self report, but that will be cheated and when a vehicle is sold it could leave huge tax liabilities. Most states require a milage statement upon sale. Probably a more workable solution is to simply charge for a standard milage per year. Yes it will undercharge high milage drivers and overcharge low mile drivers, but life isn’t fair. If you had a base miles per year and adjusted for gvw rating it would be reasonably fair in regards to cost and damage to roads.

Do Not Read Between The Lines

In my state we register every year and report the odometer reading. (Currently not a really big deal on accuracy; title is when it really matters). Given how little information you need to keep track of (VIN, odometer, date, amount paid), and given the amount of online payment services already, payment should be easy. Could do it at registration time.

Bolt driver

True, but how to you deal with the person who says they drive 10k per year, but really drive 30k? When the car sells how do you collect those back taxes? Punish the new buyer when they try to register their new purchase? If we use that example and look at a vehicle that sells after 5 years. Current gas tax is $.404 in Colorado, at 25 mpg, that is $.016 per mile. If I under report by 20k miles per year, when I sell there is a $1600 tax liability.

If a state has a regularly scheduled inspection, it’s easy. The milage can be recorded every time there is an inspection. If the system relies on self reporting, it will fail.

ga2500ev

I actually have a solution for that. By default charge taxes based on a high annual miles, such as 25,000 miles. For those who a lazy, just pay and be done. For folks who are willing to put in some effort, have them sign and have notarized an affadavid attesting to the mileage of the car. Then tax based on that mileage. So overcollection occurs for those who are not willing to put in the work to give an accurate accounting of their mileage.

ga2500ev

windbourne

Best way is pre-pay say £100 upon licensing, and give current mileage. At next licensing, give current mileage and adjust bill based on assumed £ / km.

We need to do same in america