Car tax changes ‘not as simple’ as switching petrol and diesel charges to electric owners

Martin Lewis gives money-saving advice on VED car tax

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She has warned the “whole landscape changes” when more road users take up electric models meaning tax rules will need to be rewritten and not just swapped over. This is because the country would use less oil and gas which means the Government would save on subsidies and would not be forced to put taxes higher.

Ms Howarth, founder of Octopus Electric Vehicles said revenues would be lost by transitioning to electric models, but over time outgoings would also fall.

Speaking to Express.co.uk, she said it was “too early” to tell what would happen to electric career taxation but warned against knee jerk reactions.

She said: “There’s other subsidies which go into the oil and gas sector.

“Actually, if we are driving electric cars which are driving on green energy, renewable, clean green energy, we wouldn’t need the oil and gas in the same way as we did before.

“So some of the subsidies which were going into those sectors won’t be needed necessarily as well.

“I don’t think it’s just as simple as we will lose out on the revenues on petrol and diesel and therefore we will need to replace it somewhere else.

“Actually, the whole landscape changes. We are losing those taxes but we are also losing outgoings.”

A report from the Overseas Development Institute (ODI) revealed the UK provided a total of £12.8billion of Government support to fossil fuel companies annually.

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They said this figure included £7.2billion annually in tax breaks for fossil fuel use.

The ODI said support for fossil fuels reduced by 21 percent over the past three years compared to 2-14 – 1016.

However, despite this public finance squirt to fossil fuels increased by 96 percent with an extra £1.3billion.

Last year, Sir Suna Chakrabarti, Chair of ODI Board of Trustees said the UK needed to set a “level of ambition” to phase out subsidies.

He added: “The UK government has provided global leadership on commitments to combat climate change.

“Yet beyond the targets and policy announcements, its own agencies have continued to plough public funds into fossil fuels.

“Greater transparency is needed to shift the UK’s ambitions for carbon neutrality and a green recovery from rhetoric to reality.”

Under current rules, electric cars are exempt from any car tax charges or Clean Air Zone fees.

However, the Chancellor is said to be considering a new pay per mile scheme which would see motorists charged based on the length of their journeys rather than the fuel type.

A charge of this nature is easier to implement across all fuel types at the same time meaning electric car owners may soon face costs. 

The Department for Transport (DfT) said motoring taxes would need to keep pace with changes despite the phase-out of petrol and diesel models.

The DfT said any changes will be considered by the Chancellor with any changes announced in due course.

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