A think tank has proposed the UK Government should introduce ’pay-as-you-drive’ tax for electric vehicles (EVs) to replace lost revenues from fuel duty and VED.

The Centre for Policy Studies recommends in its report ‘The Future of Driving’ that zero emission vehicles (ZEVs) should be charged a flat rate for every mile they drive, with the aim that they would still be paying significantly less than their petrol and diesel counterparts.

The Centre for Policy Studies says that there are a variety of technological options that could be used to implement such a scheme, ranging from low-tech (submitting your mileage manually) and mid-tech (an on-board device that transmits mileage automatically) to high-tech (GPS tracking)

Everyone, the report says, would receive a set allocation of tax-free miles every year, with the allocation higher for those living in remote areas with fewer transport alternatives.

As the share of ZEVs on the roads grows, this new per mile charging system could eventually completely replace fuel duty and vehicle excise duty for all vehicles.

Each vehicle would be assigned a per mile rate, based on its weight to reflect wear on the roads, and charges would be collected monthly by direct debit.

To reflect the public’s concerns about fairness, drivers would receive a ‘free mileage allowance’ based on their postcode.

The report’s co-author and energy and environment researcher at the Centre for Policy Studies, Dillon Smith, said: “Our recommendations take into account public feeling on a variety of proposals, privacy concerns, and their financial impact, and deliver a solution which can lead to fairer, better, and more efficient taxation while tackling congestion and improving air quality in our big cities.”

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