Treasury has come up with several proposals as Rachel Reeves looks to fill a black hole in public finances
Electric Vehicle (EV) drivers could be hit with a new tax under plans being weighed up by the Chancellor, according to reports.
Treasury officials are said to have drafted multiple proposals as Rachel Reeves seeks to plug a gaping hole in the public purse estimated by some economists at up to £50 billion.
Ms Reeves has already signalled that tax hikes and spending reductions are inevitable for next month’s Budget, and it seems fresh charges could be imposed on EV owners to generate additional income.
The draft proposals reportedly encompass levies based on vehicle weight or a pay-per-mile framework.
These measures are apparently under consideration because whilst EV drivers avoid fuel duty, they still add to traffic congestion and road surface wear, reports the Express.
The Sun, which first reported the story, suggests the Treasury is determined that all motorists should contribute their fair share, though no final determinations have been reached.
A Treasury spokesperson told the Express: “The Chancellor has been clear that at Budget she will strike the right balance between making sure that we have enough money to fund our public services, whilst also ensuring that we can bring growth and investment to businesses.”
The Office for Budget Responsibility (OBR), which independently monitors the health of the British economy, says fuel duties are a “significant source” of Government revenue and are expected to raise £24.4 billion in 2024-26.
The duty is paid at the pump by motorists driving petrol or diesel vehicles after filling up. It also applies to other fuels used for heating. There are approximately 1.3 million EV drivers in the UK. EV drivers only started paying road tax in April – the standard rate is £195.
The Government is preparing to ban the sale of new fully petrol and diesel vehicles from the start of the next decade as part of Ed Miliband’s push for net-zero emissions.
Last month, the head of Vauxhall told the Express more action is needed for the country to be ready for Labour’s “ambitious” 2030 target.
Managing director Steve Catlin warned buyers’ concerns around public charging points could hit the plans, as new analysis by the car giant showed the pace of installation has slowed in the last 12 months.
Ms Reeves is set to unveil her budget on November 26.
The International Monetary Fund (IMF) this week warned the UK will face the highest rate of inflation in the G7 in both 2025 and 2026. It also said Britain is set to be the second-fastest growing G7 economy this year.
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