UK fuel and excise duty must be replaced with new tax, MPs say

UK fuel and excise duty must be replaced with new tax, MPs say

The UK needs to create a new motoring tax to plug the revenue gap as drivers switch to electric cars, MPs have said.

The government should tax motorists based on miles travelled as the use of petrol and diesel vehicles decreases, the Transport Select Committee said.

If no action is taken this year, the UK faces a £35bn “black hole” in its finances, they said.

The Treasury said tax revenues would keep pace with changes prompted by electric vehicle take-up.

Sales of new petrol and diesel cars and vans will be banned in the UK from 2030 and sales of electric cars are already soaring.

Taken together, vehicle excise duty – better known as “car tax” – and fuel duty that motorists pay at the pump, raise around £35bn a year, but neither tax is levied on pure electric vehicles.

The committee warned there is likely to be no revenue from existing tax sources by 2040.

The MPs said charging people based on how much they drive, using technology to track cars’ movements, should be considered.

Such a scheme could factor in the type of vehicle and congestion, and support vulnerable groups such as those with mobility issues, and people in remote areas, the committee said.

Motorists should pay “the same or less” than they do currently, the MPs said