Electric cars and government revenue

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The response is often ‘yes, but if we can get people off cigarettes it would reduce costs to the NHS’. It would – but only by an estimated £2.6 billion. So the exchequer would still be £6.2 billion a year worse off if we got everyone to stop.

There is a similar issue with electric cars. At the moment, the fuel duty on petrol (gasoline) and diesel in the UK raises an eyewatering £28 billion annually. If we could wave a magic wand and switch everyone overnight to electric vehicles, that income would currently disappear. And though drivers might cheer, the government would certainly not be happy. So for some time there have been schemes afoot to recoup these potential losses. I gather from a press release that an organisation I was unaware of called the Chartered Institute of Logistics and Transport UK (CILTUK – who pays for these bodies?) is ‘urging the government to start talks with experts to tackle the impending black hole in the income from fuel duty.’ Don’t politicians love a good black hole?

CILTUK has produced a detailed report, but here are the headlines. Although the report’s primary recommendation is that the government needs to consult with industry experts and stakeholders (perhaps even motorists?), which is hardly a result that needed a lot of thought, there are some specific-ish proposals. The report’s authors suggest we need an approach that ‘motorists will view as reasonable and balanced… and [is] simple and easy to understand, inexpensive to collect and resistant to fraud.’ So far, so good.

What they don’t do is give us any picture of how such a revenue-raising scheme would work in practice, though the report does mention the London congestion charge. Reading between the lines, they appear to be advocating a mix of congestion charging for cities and pay-per-mile, with encouragement for car-sharing or using alternative transport. 

I sort of agree with this. I’m quite happy not to drive into cities and I do see that we need to reflect road usage to have a fair form of taxation – but the devil will certainly be in the detail, and I find it hard to see how it will be possible to come up with a combination of ‘reasonable and balanced’, ‘simple and easy to understand’ and ‘inexpensive to collect’. That feels like a recipe for a messy system.

After all, what you might regard as balanced if you are, for example, a single person driving from a village to the supermarket (because it’s the only way to get there) versus a potential car-sharing collection of people commuting to work (when they arguably should be working from home) might be difficult to achieve. Similarly, systems requiring every vehicle to carry a GPS black box would be expensive, so the most likely approach would be numberplate recognition. The good news is that such systems are well-established, but the downside is that a universal spread of them would both impinge on civil liberties – privacy would become almost impossible – and would be worrying as they aren’t infallible.

The flaws aren’t so obvious with something like a camera used to register crossing a toll bridge, because it’s a one-off measure. But if the system measures distance travelled by catching you going into and out of a stretch of road, there is a danger it will suffer from the same issues we see in our local shopping centre car park. You are allowed to stay two or three hours. But people regularly receive fines if they visit in the morning, then again in the afternoon because the cameras missed their exit in between. This would scale up massively with road charging based on numberplate recognition.

It may be possible to devise something fair and equitable, taking into account different needs. I hope it is. But I’m not convinced the suggested measures of success are achievable. For the moment, I enjoy every electric, fuel-duty-free mile with my plug-in hybrid.

Image from Unsplash by Chuttersnap

This has been a Green Heretic production. See all my Green Heretic articles here.

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