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Government urged to make road tax VED ‘fairer for all'

Lawrence Allan

Written By Lawrence Allan

Road tax VED system is changing in 2021.
  • The Government is considering sweeping changes to the Road Tax system in the UK
  • Millions of drivers are expected to make the switch to electric in the coming years but this will create a £40 billion annual fiscal black hole due to the reduction in Fuel Duty and Vehicle Excise Duty (VED)
  • Transport Committee says "something will have to change" and is exploring a ‘pay-as-you-drive' scheme

heycar is urging the Government to listen to the nation’s motorists and replace the current road tax system with one that is fairer and simpler for all.

The call comes as the first submissions have been made to the Parliamentary Transport committee’s inquiry into the future of road pricing.

The Committee was established to find a solution to what is expected to be a huge £40 billion black hole in revenue as a result of increased uptake of electric vehicles.

As part of our submission to the inquiry, we've commissioned extensive research by consulting over 10,000 drivers on their views on what the future of road tax should look like.

This research has revealed that motorists overwhelmingly favour a wholesale overhaul of the system to make it fairer and easier to understand for all.

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One in five (19%) favour the introduction of a pay-per-mile system of road charging.

At the same time, over a quarter (28%) of drivers say they would like a flat-rate of vehicle tax introduced - resulting in petrol, diesel, EV and hybrid owners paying exactly the same.

An increase in fuel duty was supported by 16%, while road tolls emerged as the least popular option - favoured by just eight per cent.

The findings also revealed that two out of three motorists were unaware that the consultation is even taking place.

"Something will have to change"

Chair of the Transport Committee, Huw Merriman MP, says: “A consequence of the transition to electric vehicles is a potential £40 billion annual fiscal black hole, due to the reduction in Fuel Duty and Vehicle Excise Duty. Something will have to change. 

"We will be exploring whether radical road pricing or ‘pay-as-you-drive’ schemes can offer a revenue-raising solution to this problem. We will explore the practicalities of different schemes, the level of public support for them, and best practice from other countries. 

"We will also assess whether new technologies and pricing can both be utilised to incentivise consumer behaviour change, reduce congestion and promote active travel.”

"The system must be simplified and made fairer for all"

“The road tax VED system requires a root and branch overhaul,” says Dan Powell, senior editor at heycar. 

“Currently it’s a confusing and opaque mish-mash of various different approaches and pieces of legislation bolted together. Our wide-ranging consultation with over 10,000 motorists couldn’t be clearer in its findings - the system must be simplified and made fairer for all road users.

“To achieve this one in five suggest a pay-per-mile system should be adopted, while some even suggest the more radical approach of a single flat-rate of tax for all vehicles. An increase in road tolls also has its supporters. And while adopting a flat-rate risks disincentivizing the uptake of EVs - the government would do well to listen to what motorists tell them.

“Ultimately, drivers understand the need for the massive generational change that is upon us, but need to see the taxation system rebalanced to reflect the cars that are going to be on the roads most in the future.”