Fears over dwindling fuel duty receipts have intensified calls within the Treasury for the implementation of a pay-per-mile road tax. The Telegraph has the details.
Treasury mandarins piled pressure on the last Government to start work on a pay-per-mile road tax, Jeremy Hunt’s former top adviser has said, in a sign officials could draw up similar plans for Rachel Reeves.
Adam Smith, formerly Chief of Staff under Mr. Hunt from 2022 to 2024, said senior civil servants repeatedly pushed Downing Street to “start preparatory work on a road pricing scheme” amid fears over dwindling fuel duty receipts.
He said “eager” Treasury officials endorsed the policy following a 2022 report by the Transport Committee that recommended the move.
Given the £22 billion black hole Ms. Reeves claims she faces, Mr. Smith said road pricing levies “will no doubt be back on officials’ agendas” as she seeks to repair the public finances.
Writing in the Telegraph, Mr. Smith said proposals for road pricing became an “early issue” for Mr. Hunt during his time at the Treasury after a response to the Transport Committee’s report became overdue.
He said Treasury officials warmed to the idea of a pay-per-mile road tax amid concerns that the switch to electric cars will eat into the £25 bilion a year raised in fuel duty.
Owners of EVs do not pay the tax because their cars are powered by electricity.
Combustion engine cars are also in decline as a ban on the sale of new petrol and diesel-powered cars looms.
Labour has promised to bring forward the ban to 2030, reversing the Conservative’s decision to delay it until 2035.
To relieve pressure on the public finances, there is a growing expectation that officials will encourage Ms. Reeves to increase fuel duty for the first time in more than a decade in her maiden Budget, in a move that would raise £3 billion. …
PwC estimates the Government will lose out on £9 billion of fuel duty revenues by 2030, when one in four vehicles on the road is expected to be electric.
Mr. Hunt announced in October 2022 that electric cars, vans and motorcycles will start to pay road tax in the same way as petrol and diesel vehicles from next April.
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