Drivers warned of charges over £190 with proposed pay-per-mile road tax – and it could be worse for certain car types
DRIVERS have been warned that they could potentially face charges of over £190 under a proposed pay-per-mile road tax system.
The new road pricing scheme has been suggested by an influential campaign group and is rumoured to be under consideration by The Treasury.
Recent reports have speculated that the measures could be introduced in the upcoming Autumn Statement on October 2, though nothing has been confirmed.
The Government has been urged to implement the policy in a report from the Campaign for Better Transport, an advocacy group dedicated to reducing reliance on cars in favour of green and public transport.
The RAC has also cautiously supported the idea, as long as it is “simple and fair” and doesn’t result in “additional taxation”.
However, Andrew Jervis, CEO of ClickMechanic, has warned that a pay-per-mile system could lead to some drivers paying up to £190 more per year than the current tax brackets.
He told The Express: “It’s a good thing that officials are exploring new options to make sure the taxation system is as fair as possible in a world where vehicle emissions are a bigger factor than ever.
What is pay-per-mile and what does it mean for me?
By Jacob Jaffa
Pay-per-mile is a proposed system of road tax based on annual mileage rather than emissions ratings.
At the moment, vehicles that produce the most pollutants are taxed the highest as the Government seeks to incentivise transitioning to cleaner transport.
However, as EV adoption steadily increases, The Treasury is predicting a significant shortfall in tax receipts.
EVs are exempt from road tax until 2025 and even then will only be placed in the lowest £20 bracket (with those worth over £40,000 also paying a luxury vehicle supplement).
One study by the RAC estimates that the Exchequer could miss out on up to £9.4 billion in tax by 2031 as a result.
With ministers scrambling to fill a £22 billion “black hole” in the books, some industry figures have proposed pay-per-mile as a potential alternative.
How does pay-per-mile work?
As the name suggests, a pay-per-mile system means that drivers pay tax based on how much they use the roads.
Your mileage is already recorded by the DVLA annually at your MOT, while there has also been suggestions that road usage could be monitored by ANPR cameras.
Under a pay-per-mile model there will be a set price of a few pence for each mile travelled.
Supporters claim that this is a fairer way to spread the burden of costs for things like road maintenance, with those who use the roads most contributing more.
But critics suggest it removes the incentive to adopt greener vehicles and have also raised concerns about personal freedom and the incentives against car use.
Does anywhere else use pay-per-mile?
While not widely used around the world, there are a number of countries who have implemented some form of pay-per-mile system.
They include New Zealand, Germany, Switzerland, Austria, Russia and the Czech Republic.
This is usually operated on the basis of tax rebates for falling under a pre-set mileage allowance, which is slightly different from the version being proposed here.
What does pay-per-mile mean for me?
That largely depends on the price that is set if pay-per-mile is approved.
One report proposing the change suggested a rate of 2p per mile, which would mean an average annual bill of around £130.
This would mean that drivers in all but the three lowest bands currently would pay less than they do at the moment but would mean an increase for owners of low-emission vehicles.
However, the higher the price is set, the more likely it is that people will pay more than under the current system.
Likewise, those who drive regularly for work or travel would likely pay a fair chunk more, while those who barely use their car would be asked to contribute very little even if it was a diesel-guzzling SUV.
“However, we need to be careful to strike the balance between achieving our climate targets while not disproportionately hitting the pockets of those who aren’t able to or can’t afford to change their driving habits.”
As it stands, the potential tax rates are very uncertain, with supporters of the policy generally advising somewhere between 2p and 6p per mile.
Some have even suggested it could go as high as 15p.
Data firm Nimble Fins estimates that the average annual mileage for Brits drivers is 6,600, which could mean bills of anywhere between £130 and £990 a year.
Currently, road tax is charged at a flat rate regardless of mileage and ranges from £20 to £735.
Under the proposed new system, though, it is estimated that the majority of drivers would pay around the same or less unless they are particularly high-mileage travellers.
Ian Read, head of editorial at Carwow, commented: “Unsurprisingly, those who drive the most miles will pay the most.
“If you are a high mileage driver you could pay more under pay-per-mile than you do under the current VED system, low mileage drivers could pay less.”
And it could also be bad news for owners of more expensive cars as the Expensive Car Supplement would likely remain on motors worth over £40,000.
This charge adds an extra £410 per year onto the base rate for five years from the second year of registration.
So if you have a pricier and want to use it a lot, you could find yourself shelling out quite a bit of cash.
The Sun's 14-year campaign to freeze fuel duty
The Sun has backed drivers as part of the Keep It Down campaign with rates of fuel duty not rising since the start of 2011.
Former Chancellor of the Exchequer Jeremy Hunt earlier this year thanked Sun readers for helping him to make the case to freeze fuel duty in his last Budget.
The freeze meant drivers would not have to face a potential £100 rise in motoring costs as a result of a 12p per litre duty hike.
Our decade-long campaign fights on behalf of readers to freeze duty on petrol and diesel to help deal with rising living costs.
Mr Hunt said: “I know how much Sun readers are feeling the pinch right now.
“Whether you drive a van, a hatchback or a people carrier I know how much you need to be on the road.
“Keeping it down means hard-working people will have an extra £100 this year without having to cut down using their vehicle.”
Sylvia Barrett, the Campaign for Better Transport’s policy director, said: “The new chancellor faces a looming black hole.
“She can avoid it, in a way which is fair and which garners broad public support.
“But she should start now, as this issue will only get more pressing.
“It should be cheaper to drive a zero-emission vehicle than a more polluting vehicle, but it’s only fair that these drivers should pay a share, and a pay-as-you-drive model can achieve this.”