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Car tax pay per mile changes could be an 'opt-in' system for petrol and diesel owners


Greener Transport Solutions – made up of a group of academics – have suggested there would be “little appetite” for a “Big Bang” approach. To prevent a sudden switch, drivers should be encouraged to join the scheme with the promise of cheaper charges compared to traditional costs.

In fact, some drivers from more rural areas may benefit from the charge as they could travel less than commuters living near cities.

The report added: “To coincide with the ban on sales of new petrol and diesel cars, government should signal that from 2030 fuel duty and VED will be abolished and replaced by a mandatory road user charge based on distance and time which will apply to all road vehicles.

“Ahead of it becoming mandatory in 2030, road users will be encouraged to opt-in.

“The new road user charge will be independently determined and monitored but should not in aggregate cost more than the current system and may save users money as it will incentivise travel at less congested times.

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“It may be cost-effective for drivers in rural areas for example to switch from paying fuel duty in most circumstances.”

It is understood Chancellor Rishi Sunak is interested in a new pay per mile charge to fill tax holes in public spending.

The move away from traditional petrol and diesel cars is expected to cost the Treasury around £40billion in lost fuel duty and Vehicle Excise Duty (VED).

A pay per mile scheme is also easier to increase across a wide range of fuel types meaning the Government could start charging electric owners.

The report added: “The recommendation to move away from VED shifts the burden of taxation away from fixed annual costs towards variable costs.

“This allows a closer linkage between road tax and infrastructure costs, congestion and emissions.

“A driver who travels 60,000 km per annum, for example, imposes a much higher cost than a driver who only travels 6,000 km per annum.

“Current VED charges do not reflect this. Shifting the burden away from ownership to use increases the propensity to walk, cycle or use public transport.”


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