Taxing road users by mile

[Harpers Tate]

Has anyone worked out how the per-mile charge for an EV compares with the saving from the VAT cut on electricity if that EV is charged at home?

My off-peak overnight rate is currently fixed at 4p/unit inc VAT. That will fall by just under 0.2p when no VAT. To be fair, that's an unusually low rate; approx. double that (very variable between providers) is perhaps a better yardstick. So let's say 0.4p per unit VAT drop.

My car covers about 4 miles per unit (= kWh). That's probably about average, but again, variable with car model and driving style.

VAT drop by these measures comes to 0.1p/mile.
If I had a flat 24 hour rate of, say 24p/unit (i.e 3x the yardstick offpeak rate) that would give a VAT drop of 0.3p/mile

eVED is proposed at 3p/mile.

Does that rough calculation help answer your question, even if only approximately? Saving ~ 3 - 10% of the eVED.

 

[PTR 444]

Seeing that cutting VAT on electricity was one of ABs first actions to ease life for poorer people I doubt that he would consider that.

I think it would have been better overall to increase VAT on all energy (electricity, gas etc) to a rate slightly below that of fuel duty (let’s say 15%), with a “domestic use” reimbursement for the poorest households to offset the additional costs they would have to incur for non-motoring purposes. While nowhere near the ideal solution for taxing car use, it would have received much less opposition than full road pricing or a per-mile charge.

 

[edwin_m]

My off-peak overnight rate is currently fixed at 4p/unit inc VAT. That will fall by just under 0.2p when no VAT. To be fair, that's an unusually low rate; approx. double that (very variable between providers) is perhaps a better yardstick. So let's say 0.4p per unit VAT drop.

My car covers about 4 miles per unit (= kWh). That's probably about average, but again, variable with car model and driving style.

VAT drop by these measures comes to 0.1p/mile.
If I had a flat 24 hour rate of, say 24p/unit (i.e 3x the yardstick offpeak rate) that would give a VAT drop of 0.3p/mile

eVED is proposed at 3p/mile.

Does that rough calculation help answer your question, even if only approximately? Saving ~ 3 - 10% of the eVED.

That's helpful thanks.

 

[Peter Sarf]

My off-peak overnight rate is currently fixed at 4p/unit inc VAT. That will fall by just under 0.2p when no VAT. To be fair, that's an unusually low rate; approx. double that (very variable between providers) is perhaps a better yardstick. So let's say 0.4p per unit VAT drop.

My car covers about 4 miles per unit (= kWh). That's probably about average, but again, variable with car model and driving style.

VAT drop by these measures comes to 0.1p/mile.
If I had a flat 24 hour rate of, say 24p/unit (i.e 3x the yardstick offpeak rate) that would give a VAT drop of 0.3p/mile

eVED is proposed at 3p/mile.

Does that rough calculation help answer your question, even if only approximately? Saving ~ 3 - 10% of the eVED.

So that means the loss of income from ICE fual duty is the biggie.

I think it would have been better overall to increase VAT on all energy (electricity, gas etc) to a rate slightly below that of fuel duty (let’s say 15%), with a “domestic use” reimbursement for the poorest households to offset the additional costs they would have to incur for non-motoring purposes. While nowhere near the ideal solution for taxing car use, it would have received much less opposition than full road pricing or a per-mile charge.

This is what I think will be most palatable. It is not perfect but perfect is very imperfect when t comes to perceptions.

Yes the tax on car use has to be hidden in amongst some other cost to make it palatable. Sadly that does mean there is not much incentive to reduce level of use. Actually connecting what you paid at the petrol station with the miles you did is lost even though most motorists never realised how much money went to the state !.

 

[The Ham]

The thing with a zonal charge (i.e. within built up areas) is that it does a few things:
- ANPR coverage is limited
- taking a back road would likely incur higher charges than a per mile trunk road
- rural areas would pay less
- those it's tracking cars (such could be driven by more tab one person) in an area where walking or cycling is likely viable for trips within that zone, so if you don't want the government to know where you're gong there's an easy option out
- the charge can be proportional to the level of traffic congestion

On the charging it could be £1 minimum daily charge plus for each other zone it based on the level of congestion say 30p for a small village, through to £6 for each London Borough, with the most expensive zone (up to 75p) being included in the minimum daily charge but also a maximum charge for each urban area (say 50% more than the current congestion charge.

Roll it out over (say) a 10 year period from 2028 and freeze fuel duty during that time. Those in big urban areas would be encouraged to move away from driving as much as currently first and to electric cars rather rapidly. By 2038 the majority of the UK car fleet would likely be EV's and so the "I'm paying tax twice" would be a choice people had made to do.

 

[Sonic1234]

Sadly that does mean there is not much incentive to reduce level of use.

The Government and the economy needs this to be the case. There's a lot of economic activity that happens because people don't realise the cost of travel, if you made this explicit (or they switched to train or bus) it wouldn't happen. On the other hand, motorists pricing travel at zero gives you a lot of frivolous use (e.g. the examples of people driving to corner shops).

As in the proposal above, no one is going to pay £6 to access Orpington High Street.

 

[Peter Sarf]

The thing with a zonal charge (i.e. within built up areas) is that it does a few things:
- ANPR coverage is limited
- taking a back road would likely incur higher charges than a per mile trunk road
- rural areas would pay less
- those it's tracking cars (such could be driven by more tab one person) in an area where walking or cycling is likely viable for trips within that zone, so if you don't want the government to know where you're gong there's an easy option out
- the charge can be proportional to the level of traffic congestion

On the charging it could be £1 minimum daily charge plus for each other zone it based on the level of congestion say 30p for a small village, through to £6 for each London Borough, with the most expensive zone (up to 75p) being included in the minimum daily charge but also a maximum charge for each urban area (say 50% more than the current congestion charge.

Roll it out over (say) a 10 year period from 2028 and freeze fuel duty during that time. Those in big urban areas would be encouraged to move away from driving as much as currently first and to electric cars rather rapidly. By 2038 the majority of the UK car fleet would likely be EV's and so the "I'm paying tax twice" would be a choice people had made to do.

Hmm. Quite attractive really. It might not cover long trips on motorways but it would hit local travel where public transport or walking is feasible.

The Government and the economy needs this to be the case. There's a lot of economic activity that happens because people don't realise the cost of travel, if you made this explicit (or they switched to train or bus) it wouldn't happen. On the other hand, motorists pricing travel at zero gives you a lot of frivolous use (e.g. the examples of people driving to corner shops).

As in the proposal above, no one is going to pay £6 to access Orpington High Street.

This is the elephant in the room !.

Perhaps the cost of motoring we need to worry about is ONLY that which cost the NHS. So driving where walking would be healther, less polliution in towns, less accidents where injury occurs - well lower speed limits covers that.

How much to charge. I would suggest more than a return bus fare in towns/zones. Now I would wish for something less dramatic than the simple ULEZ we have in London. Very low ICE user here. Does a short hop to get petrol have to be charged as vindictively as a long trip through London ?. If I take my car to a garage for its MOT and bring it back a following day do I really have to pay a full London ULEZ charge for two days on a vehicle I would otherwise drive once a month on average.

I have been thinking about this more and more if I had a camper van (my dream). I might use it two or three times a year. That is six ULEZ charges for three trips. But two more ULEZ charges just to MOT it a short distance away. I suppose it is not a big charge in total - yet.

 

[martin butler]

How much would be needed to be added to the basic rate of tax if say fuel duty and VED were scrapped? and the cost of the upkeep of the road network was instead paid for out of general taxation?

 

[Mawkie]

Roads haven't been directly paid for from VED since 1936; it goes in the general taxation pot.

I did some quick man-maths on the interest rate increase:

Fuel Duty Revenue is £24bn

VED Revenue is £8.2bn

So around £32bn combined.

Revenue from a 1p Income Tax rise is £6.9bn

So, a tax rise of nearly 5p in the pound.

The UK did have 35% in the 70s, but I would argue a 5% increase is unimaginable, and politically toxic in the current climate.

 

[martin butler]

Roads haven't been directly paid for from VED since 1936; it goes in the general taxation pot.

I did some quick man-maths on the interest rate increase:

Fuel Duty Revenue is £24bn

VED Revenue is £8.2bn

So around £32bn combined.

Revenue from a 1p Income Tax rise is £6.9bn

So, a tax rise of nearly 5p in the pound.

The UK did have 35% in the 70s, but I would argue a 5% increase is unimaginable, and politically toxic in the current climate.

That depends on how you sell it to an otherwise mostly dumb electorate motorists will save 32BN a year, transport costs will be lower, etc, but to pay for it income tax will go up by 5p in the pound, how many will see beyond the ammount they will be saving, and 5 p in the pound, I would imagine not many

 

[Mawkie]

mostly dumb electorate

Speak for yourself.

 

[martin butler]

Speak for yourself.

Come on now, be honest large sections of the public are at best semi-literate and easy to manipulate with easy-to-understand slogans, such as stop the boats, Brexit is brexit, ban the bomb etc,

 

[edwin_m]

As a relatively low mileage driver I resent any suggestion that more damaging behaviour should be subsidised out of everyone's taxes. Lower driving costs would also mean more driving, meaning more general taxation for extra maintenance costs as well as many controversial road expansion schemes.

 

[Peter Sarf]

Roads haven't been directly paid for from VED since 1936; it goes in the general taxation pot.

I did some quick man-maths on the interest rate increase:

Fuel Duty Revenue is £24bn

VED Revenue is £8.2bn

So around £32bn combined.

Revenue from a 1p Income Tax rise is £6.9bn

So, a tax rise of nearly 5p in the pound.

The UK did have 35% in the 70s, but I would argue a 5% increase is unimaginable, and politically toxic in the current climate.

What proportion of that £32bn is coming from non-car ie HGVs (Heavy Goods Vehicles) and suchlike ?.

That £8bn in road tax is going to stay - it is too much to dump on some other method. Shame as I like the idea of easy ownership but a charge if you choose to use your car.

That depends on how you sell it to an otherwise mostly dumb electorate motorists will save 32BN a year, transport costs will be lower, etc, but to pay for it income tax will go up by 5p in the pound, how many will see beyond the ammount they will be saving, and 5 p in the pound, I would imagine not many

Oh the electorate may be dumb BUT not that dumb. A simple headline in the media will awaken their wrath - income tax to rise by 5%. No chance, people on the streets.

It is also unfair on all those people who do not own or operate a car or any other such polluting device.

Slightly less unfair would be a higher tax on energy overall, I mean gas and electricity.
BUT it depends how that £24bn looks when added to the rates applied for gas and electricity.

The ONS (Office for National Statistics) says there are about 29 million households in the UK so that £32bn is just over £1,000 per household. So for a general fuel tax that is £1,000 more to pay on gas and electricity per year - ouch. And it does not explicitly tax road use but then it does curtail energy usage generally and encourage efficiency schemes for homes and businesses.

But taking the £24bn alone (road fuel tax) is about £800 more general energy tax per household per year. Of course you could also ignore the proportion of fuel tax that is paid by businesses BUT how would you collect it ?. So to put it into context the winter fuel allowance is 25% of what the state collects in road fuel tax (ignoring eligibility).

I can now see why road tax has gone up so much over the recent years !.
It is obvious to me now that the government (well the state) is intending to replace lost road fuel tax with road tax (VED etc). So regardless of level of use.

As a relatively low mileage driver I resent any suggestion that more damaging behaviour should be subsidised out of everyone's taxes. Lower driving costs would also mean more driving, meaning more general taxation for extra maintenance costs as well as many controversial road expansion schemes.

Exactly. It would encourage an increase the use of something we want to limit.

So although it would be easiest to increase general fuel tax as it would (maybe ?) be subtle it would not apply directly to car use.

Hence the idea of a mileage charge. This is more obvious and would curtail use but because it is more obvious it will be more upsetting to a proportion of the population. It is a two edged sword.

I suppose the nearest parallel to a mileage charge is water charging. Many of us have had to come to terms with having a water bill calculated by the amount of water we actually use. I don't like it as a gardener but it is fair. I do not dislike it enough to be angry (well until I think of the privatised water industry and where that money goes).

Not taxing EVs on level of use from the start was a mistake. OK EV use has been encouraged but we now have to break it to all those smug * owners that they now have to pay more tax. The government has made a rod for its own back.

It is obvious when you look at the steep rise in road tax (VED) that the state will end up just collecting via road tax and ignore any other charges as road fuel tax income ebbs away.

* = Believe me, I have observed some arguments where the smug owners in their shiny EVS who think everyone else can afford to trot out and get a brand new EV. That is arguments with possibly equally entitled petrol heads I suppose.

 

[zero]

I don't think this has been suggested in the past 7 pages yet - with a per mile charge, perhaps every vehicle could have a tax-free allowance of say 2500 miles each year. Then people who like to drive abroad can't complain (as much) about non-UK mileage being taxed.

People who commute by car because the alternatives are no good are likely to do much more than 2500 miles, so it still discourages additional use. People who already drive sparingly are unlikely to add frivolous miles just because it's "free".

I would also rather have HGVs and other large trucks be taxed a lot more due to the exponentially higher damage they cause, with less burden on cars - even if it leads to higher prices of consumer goods.

 

[cactustwirly]

I'm starting a separate thread on the subject of Motoring Taxes so as to split away the continued discussion on this away from the more general EVs thread. That sub-discussion has already drifted away from EVs specifically.

This is prompted by the stated government intention to replace lost fuel duty in Electric Vehicle (EVs) and Plug-In hybrids (PHEVs) by a per-mile fee, alongside existing taxation; VED, fuel duty etc.

This is my opinion on the subject:

I totally understand and accept that as the population of EVs on the road increases, the government will want (or need) to replace the revenue not being paid in fuel duty by users of such vehicles.

The stated intention is to begin to levy a 3p/mile charge on full EVs and a 1.5p/mile charge on PHEVs, whilst retaining the existing fuel duty and no per-mile fee for other types.

I think this is totally the wrong approach because it's tending to persuade those looking for their next vehicle away from (what is generally acknowledged now to be) more environmentally friendly vehicles and towards retaining the inertia of burning liquid fuels at the point of use. It is a single new factor of more expense added solely to those vehicles with zero emissions (and to PHEVs to a lesser extent) and psychology will tend to make people see this additional burden in isolation rather than as part of a bigger picture of their expenses. (Consider: do you know instantly how much per mile you would - or do - pay in fuel duty and/or VED?)

First to consider is the annual VED. There are non-revenue reasons currently to continue an annual VED of some type and those are the same reasons initially EVs were liable to VED at a rate of £0 pa (rather than simply being exempt). Annual VED application cross-checks against insurance and MOT so there may be some value in maintaining it in some form. Whether that is £0 or some nominal administration charge is unimportant, but it should be the same for all vehicles.

It's time to do away with fuel duty completely and replace it, along with VED (on a revenue-neutral basis) with an all-encompassing per-mile levy. The levy should be set at a parabolic curve upwards based on environmental damage at the point of use. That's perhaps best or most easily measured by CO2 emissions. I can't suggest actual incremental amounts since I don't have access to enough data for vehicle populations, emissions and current revenues, but by way of illustration

A zero emission vehicle might be the currently-proposed 3p/mile. I have based (for illustration of the proportions only, not the actual revenue-neutral amounts needed) on the other bands on the current CO2 emission bands (g/km) used for VED calculation on new cars, first year rates.

g/km	p/mile		g/km	p/mile
0	3		111-130	153
1-50	15		131-150	198
51-75	72		151-170	417
76-90	96		171-190	693
91-100	111		191-225	1110
101-110	126		226+	1647

My imagination says that those looking to choose their next car (whether new or used) might find a single taxation scheme such as this far simpler to envisage and thereby more persuasive than the present (and proposed) mix of fuel duty, annual VED and per-mile rate. It intentionally highly penalises those who choose high emission vehicles.

There is a separate discussion to be had about how to measure and collect per-mile fees (to whatever extent they are levied). To my mind, the simplest method would be to collect the fee alongside the annual MOT fee. Vehicles that change hands in between MOT tests (either in the first 3 years from new, or at any other time between tests) could easily have any outstanding per-mile fee accounted for in the settlement. (e.g., Car valued at £10,000, mileage unpaid £1000, net £9000. )

Why is your charges so regressive?
It would be cheaper for me to become unemployed and claim benefits as it basically penalises me for driving to my place of work
Charging £6 per mile for a mundane petrol car is completely ludicrous, typical left wing ideology that is anti growth and regressive.
Just like VAT on Private schools and increases to employers NI

 

[Bletchleyite]

Hmm. Quite attractive really. It might not cover long trips on motorways but it would hit local travel where public transport or walking is feasible.

This is the elephant in the room !.

Perhaps the cost of motoring we need to worry about is ONLY that which cost the NHS. So driving where walking would be healther, less polliution in towns, less accidents where injury occurs - well lower speed limits covers that.

How much to charge. I would suggest more than a return bus fare in towns/zones. Now I would wish for something less dramatic than the simple ULEZ we have in London. Very low ICE user here. Does a short hop to get petrol have to be charged as vindictively as a long trip through London ?. If I take my car to a garage for its MOT and bring it back a following day do I really have to pay a full London ULEZ charge for two days on a vehicle I would otherwise drive once a month on average.

I have been thinking about this more and more if I had a camper van (my dream). I might use it two or three times a year. That is six ULEZ charges for three trips. But two more ULEZ charges just to MOT it a short distance away. I suppose it is not a big charge in total - yet.

The idea of ULEZ is to nudge those who drive in London often to purchase a compliant vehicle while still allowing those who do so occasionally to drive in for a fee. It has worked very well.

If you live in/near London you will want to ensure your vehicle is compliant.

 

[35B]

The idea of ULEZ is to nudge those who drive in London often to purchase a compliant vehicle while still allowing those who do so occasionally to drive in for a fee. It has worked very well.

If you live in/near London you will want to ensure your vehicle is compliant.

ULEZ is also focused on the most polluting vehicles and, at least in theory, meant to be transient until the vehicles that cause the issue are off the road. It is not a road tolling system and shouldn't be confused for one.

But, as I read these suggestions, I keep coming back to a fundamental - the need is not for a sophisticated tax that will drive modal shift but simply to replace a lot of tax that will soon not be collected. That requires some subtlety and care, otherwise the result will be that fuel duty will disappear and the political window to replace it will be lost.

 

[Harpers Tate]

.....it basically penalises me for driving to my place of work

No, it does not. It penalises you for choosing to do so using something that pours out planet-destroying toxic schist whenever it is used.
In any case, as I was at pains to point out, the numbers I used were NOTHING MORE than to illustrate the point - to extreme perhaps.

 

[AlterEgo]

No, it does not. It penalises you for choosing to do so using something that pours out planet-destroying toxic schist whenever it is used.
In any case, as I was at pains to point out, the numbers I used were NOTHING MORE than to illustrate the point - to extreme perhaps.

It's probably worth remembering that for many people driving is not really a choice. For a lot of people it's their only way to get to work.

 

[cactustwirly]

It's probably worth remembering that for many people driving is not really a choice. For a lot of people it's their only way to get to work.

My workplace has very limited public transport, there is a bus 2 a day but is not very convenient. It's a 90 minute door to door journey for 8 miles...

Will Amazon drivers be penalised in the same way OP?
What about Stagecoach who operate old clapped out 20 year old buses?

 

[Sonic1234]

Will Amazon drivers be penalised in the same way OP?

They need to be encouraged to use their legs a bit more, they'll drive from one side of the street to the other to deliver an envelope. Not even a large/heavy package.

 

[Krokodil]

It's a 90 minute door to door journey for 8 miles...

So 30 minutes on an electric-assist bike?

 

[cactustwirly]

So 30 minutes on an electric-assist bike?

That's not a realistic suggestion, especially in the winter or days recently where it's been 35 degrees plus.

You can't ride an electric bike whilst safely carrying laptops efc

 

[Krokodil]

That's not a realistic suggestion, especially in the winter or days recently where it's been 35 degrees plus.

Winter? As the Dutch say "you are not made of sugar". Wear a coat. 35 degrees? It's toasty but if you're suitably dressed (I'd recommend natural fibres with enough room for airflow) you'll be fine, people cycle in much hotter climates. Drink water.

You can't ride an electric bike whilst safely carrying laptops efc

Yes you can. I've carried all manner of stuff in my conventional bike. Including my laptop and a change of clothing (suitablty folded so that it doesn't crease). Lots of people cycle commute to office jobs.

 

[cactustwirly]

Winter? As the Dutch say "you are not made of sugar". Wear a coat. 35 degrees? It's toasty but if you're suitably dressed (I'd recommend natural fibres with enough room for airflow) you'll be fine, people cycle in much hotter climates. Drink water.


Yes you can. I've carried all manner of stuff in my conventional bike. Including my laptop and a change of clothing (suitablty folded so that it doesn't crease). Lots of people cycle commute to office jobs.

Was thinking the treacherously conditions up steep hills which are not always gritted well

Bikes are stolen easily and electric bikes are very expensive to replace

 

[Krokodil]

Was thinking the treacherously conditions up steep hills which are not always gritted well

If you're that concerned then use studded tyres in winter. They're legal on bikes (as they're too light to do any damage). I've cycled to and from work (without any special tyres) in conditions that cars would struggle with. The trick being that if it's especially bad you can dismount and walk (sometimes I kept my hiking microspikes in mywork bag just in case, though I never used them in the event). There are cities in Finland which are just outside the Arctic Circle who have respectable numbers of cycling commuters even in the depths of the Finnish winter. A Canadian once told me that he only stops cycling to work when the lubricants on his bike seize up, which is a seriously cold temperature.

Regardless, as we're talking about mileage-based charges you don't need to cycle 365 days per year to save some money. Start cycling in fair weather.

Bikes are stolen easily and electric bikes are very expensive to replace

Is your workplace in a high crime area? A decent lock will go a long way.

 

[cactustwirly]

If you're that concerned then use studded tyres in winter. They're legal on bikes (as they're too light to do any damage). I've cycled to and from work (without any special tyres) in conditions that cars would struggle with. The trick being that if it's especially bad you can dismount and walk (sometimes I kept my hiking microspikes in mywork bag just in case, though I never used them in the event). There are cities in Finland which are just outside the Arctic Circle who have respectable numbers of cycling commuters even in the depths of the Finnish winter. A Canadian once told me that he only stops cycling to work when the lubricants on his bike seize up, which is a seriously cold temperature.

Regardless, as we're talking about mileage-based charges you don't need to cycle 365 days per year to save some money. Start cycling in fair weather.


Is your workplace in a high crime area? A decent lock will go a long way.

The thieves will just cut through the locks or detach wheels to get hold of bikes

You basically cannot leave any sort of nice bike in Reading it will get stolen

 

[Krokodil]

The trick is to make it slightly harder to steal than the one next to it.

Or use a folding bike and bring it indoors with you.

 

[AlastairFraser]

The trick is to make it slightly harder to steal than the one next to it.

Or use a folding bike and bring it indoors with you.

As much as I understand that typical theft prevention tips work in a town with a proactive police force, Reading is absolutely notorious for bike theft and general petty crime.
Have a look at the crime stats for Abbey and Thames wards (central Reading), and you'll be shocked about how bad it is.