[Auto] What is a pay-per-mile model? And how might the maths work out?

[Mr,SnaPeR]

It’s a new way of paying for the privilege of driving. It's also known as 'road pricing'. Currently (barring a handful of exemptions including contentious ones on electric vehicles), every car on the road is currently subject to vehicle excise duty (VED), more commonly known as ‘road tax’. Couple it with the tax we also pay on fuel and the Treasury has got itself a tidy sum for maintaining the roads and other such stuff.

According to the Office of Budget Responsibility (aka the OBR), VED raised £7.3 billion in 2022-23. Since electric vehicles are going to start paying from 1 April 2025, the boffins at the OBR have forecast a billion-pound climb to £8.3 billion for the year 2024-25.

Yes, it would. It equates to about £290 per household on average, but of course, not every household has a driver. What’s more, there’s fuel duty. That ridiculously disproportionate amount of tax on our pennies spent at the pump amounts to about 53p per litre (ouch) and averages out at an eye-watering £850 per UK household.

But of course.

Remember though, these are only averages. If you drive more or you have a more powerful car, you’ll naturally spend more on fuel and/or road tax. Naturally, there are concerns that as more drivers switch to electric and fewer drivers pay for fuel, there will be an increasingly larger hole in the nation's coffers as the revenue diminishes. Ok, how will a pay-per-mile model work as an alternative? Frankly, we don't yet know. There are rumours flying around that the Government will introduce a pay-per-mile model in the next Budget (30 October), but nothing’s been confirmed. Though there are no details on how such a model might be implemented, there are other countries in the world that have been running such road pricing schemes.

 

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