Reeves urges to slap drivers with tax per mile, which could raise £20 billion
The prospect for motorists is to be prosecuted in every mile of driving, tucking the UK’s black hole in public finances under radical plans.
Resolution Foundation – A think tank with close ties to Labor urged Rachel Reeves to overhaul the overhaul tax, warning that fuel tax revenue is collapsing as drivers turn to electric vehicles.
Its proposal will allow drivers to pay more for annual levies and fees per mile from 3p to 9p, with heavier vehicles paying more to reflect the pressure on UK roads. The report said the system could raise up to £20 billion a year, possibly covering the prime minister’s looming fiscal gap of £30 billion.
“Auto taxes are an important part of the tax system, but they are also a significant and significant fiscal risk,” said Adam Corlett, the author of the report. He suggested that Miles can be recorded through MOT inspections, self-reports or telematics, while also suggesting that VAT be entered at public charging points and reverse long-term freezing fuel taxes.
Currently, the fuel tax reaches about £28 billion a year, but the office of budget responsibility is expected to drop to £22.6 billion by 2030. Corlett said raising the tax rate by 3% per year and gradually revoking temporary 5P cuts could push taxes to nearly 70p at the end of the decade.
The car group immediately postponed, warning that road pricing will unfairly hit drivers while raising concerns about privacy and stalking. “It’s almost certainly going to raise prices and probably the only way to track everyone, which has the freedom and privacy implications,” said Ian Taylor of the British Drivers Alliance.
The report comes as Reeves faces enormous pressure ahead of her November budget, speculating that she may need to raise new taxes up to £30bn to meet her financial rules.
A spokesman for the Ministry of Finance declined to comment on the proposals, saying only: “The Prime Minister makes tax policy decisions on fiscal incidents.”
