The autumn budget 2021 failed to tackle the urgently needed reform of the vehicle tax.
The mass uptake of electric cars in the UK is expected to create an annual tax hole of £ 37 billion in government finances, with electric vehicles currently attracting no or reduced road tax.
Last week, the Treasury Department’s Net Zero Review issued a strong warning, saying that tax revenues from the existing VED system will “decline towards zero.” However, the review did not address how the government should address this issue. And Chancellor of the Exchequer, Rishi Sunak, did not mention this in the October 27 budget and expenditure review. The lack of detail has drawn criticism from industry experts.
Stephen Joseph, Transport Policy Advisor, said: “The government cannot take to the streets forever. Everyone knows that if we switch to electric vehicles, the government will have to find a way to replace the revenue it currently receives from fuel taxes. “
Caterina Brandmayr, Head of Climate Policy at the Green Alliance, said: “While the Treasury Department faces the inevitable decline in fuel tax revenues in the coming years, it remains silent about plans to reform road taxation.
“But the Chancellor cannot put off this much longer, as doing nothing is not an option and sudden tax changes are unlikely to be well received by the population.
“Therefore, the government should urgently start a conversation about what a fairer and more sustainable vehicle tax system should look like.”
Road tolls have been proposed as a possible solution by the House of Commons Transport Selection Committee, with a report expected in the coming weeks.
However, given that road tolls are mixedly assessed by drivers, it remains to be seen which direction the government will take. And industry commentators are frustrated that the future of the VED vehicle tax was ignored during the last budget.
