A per-mile car tax should be introduced in the next budget, says Tony Blair’s think tank…

October 23, 2024, 20:57

Rachel Reeves should introduce a mileage tax, Sir Tony Blair’s think tank has said.

Under the proposed £10 billion driver tax credit, cars and vans should be charged from 1p per mile and HGVs should be charged from 2.5p to 4p per mile.

The Tony Blair Institute (TBI) said they needed to be introduced as soon as possible before more people switched to electric and got used to low-tax driving.

Revenues are expected to fall by 40 percent over the next 10 years, after adjusting for inflation, an advisory team says.

If, as predicted, almost every car is electric, they will be almost completely eliminated by 2050.

Read more: Rachel Reeves will fund Ukraine’s war effort using £2.26 billion in profits from frozen Russian assets

Read more: Chancellor Rachel Reeves has decided to increase inheritance tax in the wake of the upcoming budget blitz

“Under our proposals, the government would keep the fuel surcharge at current levels and instead add an increasing per-mile charge for almost all road users – both electric and conventional vehicles,” the TBI report says.

“In principle, the system we propose is intended to maintain real revenues from automotive taxes despite growing electrification.

“Compared to the plans inherited from the previous government, our reforms will generate almost £3 billion in extra revenue a year by the end of this parliament and almost £10 billion a year by the end of the next term.”

TBI further stated: “Unless the government acts quickly to develop a clear plan to deal with the other social costs of driving, more and more road users will buy electric vehicles with an implicit promise that they will not be taxed.”

“Trying to implement a new tax system later will only become more difficult.”

A government spokesman said: “We have no plans to introduce road pricing.

“We are committed to supporting our automotive sector in the transition to electric vehicles to achieve our legally binding climate targets.”