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What Will The Government Tax When We All Have Electric Cars?

July 28, 2013

By Paul Homewood

 

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As readers will be aware, I have been working on a series of posts, analysing the impacts of the Climate Change Act.

Part of the strategy for achieving the emissions reductions, which are laid out in the Act, involves a large scale switch to electric powered cars. The Carbon Plan, for instance, talks of 50% of all new car sales being electric variants between 2023 and 2028.

This rather causes a bit of a problem for the Treasury, because about 60% of the price of petrol goes back to the government in fuel duty and VAT.

It also causes a bit of a problem for the driver. Cost comparisons for electric cars against conventional ones, which at best do not look very attractive, always compare running costs which, for the latter, include all these taxes. When we all drive electric cars, the government will have to dream up new ways of getting our money off us, and as a consequence we will all be much worse off than we are now.

From a political point of view, this is a serious issue, as none of the alternatives seem particularly attractive. If the tax is added onto the cost of electricity, it will make fuel poverty much worse. Increasing general taxation, such as VAT, would also be unduly regressive. Increasing income tax would also be problematic.

So you would have thought that the government would, at the very least, have carried out some contingency planning as to the amounts of money involved, and the possible options. But it appears that DECC, at least, have done no such planning, nor are they aware of any.

They have confirmed this to me in response to my FOI request, and suggested I contact the Treasury, which I have now done.

So much for joined up government!

9 Comments
  1. Richard T. Fowler permalink
    July 28, 2013 1:42 pm

    The answer to your headline question is of course that their plan does not intend for everyone to have an electric car, because the plan’s authors know that the technology to make that happen without increasing CO2 emissions does not exist and there is no timetable visible for when it may exist.

    I would say that the plan is apparently to start taxing both types of transportation equally, and then not to worry themselves greatly about whether CO2 emissions meet their targets.

    RTF

  2. Marco permalink
    July 28, 2013 5:37 pm

    A miles-driven tax seems like the most logical solution for the (distant) future.

  3. July 28, 2013 5:48 pm

    Road tolls.

  4. Joe Public permalink
    July 28, 2013 7:19 pm

    Everything they can.

    And what makes you think they’ll wait ’til we all have ‘Leccy cars?

    The proliferation of Average Speed Cameras require just a software tweak to implement Marco & QV’s fears.

  5. Streetcred permalink
    July 29, 2013 12:44 am

    Smart Meters ! The ‘refueling’ power outlet is separately metered at a different tariff.

  6. John F. Hultquist permalink
    July 29, 2013 5:56 am

    http://en.wikipedia.org/wiki/Vehicle_miles_traveled_tax

    Not to fear; governments are on the prowl.

  7. July 29, 2013 7:27 am

    Reblogged this on Johnsono ne'Blog'as.

  8. Bill permalink
    July 31, 2013 8:09 am

    Isn’t that what Carbon Taxes are for? To act as a buffer so that when electric vehicles would normally start to affect the treasury coffers, the tax hole will already have been filled……no? Carbon Tax is part of the transition from ‘carbon’ to ‘none-carbon’.

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