‘Situation is urgent’ Some drivers may need to pay more car tax under new proposals

Petrol prices: Howard Cox calls for cuts to fuel duty

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Car tax proposals were unveiled last week which aimed to suggest a new taxation scheme which could be used to transform motoring in the coming years. The Transport Committee report stated that “most motorists” will pay the same or less car tax than they currently do.

These ideas are being put forward to prepare for major revenue losses that are expected with the reduction from fuel duty and Vehicle Excise Duty (VED).

The Government is continuing forward with its plan to ban sales of new petrol and diesel cars in 2030, followed by a similar ban on hybrids in 2035.

It warns that this could cause a dramatic drop in revenue from fuel duty and VED, estimating a loss of around £35billion.

This is the approximate rate of 1.5 percent of UK GDP and around four percent of overall tax receipts in 2021 and 2022.

Some have suggested that electric vehicle drivers would need to start paying a form of car tax, since they don’t currently pay VED or fuel duty.

The Transport Committee report said: “Fuel duty and vehicle excise duty raise some £35billion a year.

“Approximately 20 percent of that revenue is disbursed on maintaining and developing the roads.

“Neither fuel duty nor vehicle excise duty are currently levied on electric vehicles.

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“The Government is phasing out the sale of petrol and diesel cars by 2030.

“Under the current system of fuel duty and vehicle excise duty, that policy will reduce tax revenues obtained from motoring to zero over the next 20 years.

“Without radical reform, policies to deliver net zero emissions by 2050 will result in zero revenue for the Government from motoring taxation.

“A failure to replace existing motoring taxes with an alternative road charging mechanism will lead to either decreased investment in public services, including road maintenance, or increased Government borrowing.”

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