A road toll should be introduced to plug lost revenue from fuel duty, study says

Ministers have been told to consider a national system of road tolls to compensate for the huge loss in revenue from fuel duty when electric cars become mainstream on the back of new research.

At present, fuel duty – the tax on petrol and diesel – is charged at a rate of 57.95p for every litre UK motorists pump into their cars. It alone is expected to raise £28.2billion for the Treasury in 2018-19.

However, this revenue stream looks set to shrink significantly by 2040 when UK ministers plans to ban the sale of vehicles with combustion engines in a bid to persuade drivers to switch to electric cars.

A new study by Bloomberg News Energy Finance claims a road toll scheme charging up to 9p a mile should be introduced to compensate for the £14 billion lost in fuel duty revenue – a move that would cost motorists £710 a year.

Taking a toll: Bloomberg NEF said global economies could plug the loss of revenue collected from fuel taxation by charging motorists for each mile they drive The Treasury is estimated to earn over £28 billion from fuel duty - the tax on petrol and diesel - in 2018-19 The Government is pushing for motorists to switch to electric vehicles to reduce air pollution. However, this causes a dilemma when it comes to taxation of fuel The Labour government in 2005 suggested a road pricing policy where drivers would be forced to pay £1.34 per mile to use motorways at peak times - however, this received widespread opposition from the nation's motorists and plans were scrapped by 2007 AA president Edmund King has suggested an alternative scheme called Road Miles. This gives a free allowance of 3,000 miles each year. Anything above that and motorists would be charged per mile driven AA president Edmund King has suggested an alternative scheme called Road Miles. This gives a free allowance of 3,000 miles each year. Anything above that and motorists would be charged per mile driven

AA president Edmund King has suggested an alternative scheme called Road Miles. This gives a free allowance of 3,000 miles each year. Anything above that and motorists would be charged per mile driven

The Road Miles pricing scheme suggested would provide an allowance of 3,000 miles per year free of charge to all drivers.

Anything over that distance and motorists would be expected to pay a fee for every mile, as put forward by the Bloomberg NEF research.

King’s strategy would allow motorists living in rural areas and electric vehicle owners to receive more free miles, and the whole scheme would be phased in gradually as fuel duty was scaled back.

An individual’s mileage would likely be tracked by a device plumbed into the car’s diagnostic port or, for older cars, checked annually as part of the MOT.

The Kings were shortlisted for the prestigious Wolfson Economics Prize for the proposal.

No solution has been proposed by government yet, but it’s expected to be investigated as the sale of fuel drops as part of the pay off of increasing EV uptake.