Chancellor Reeves Confronts Road Tax Dilemma as EV Popularity Grows
The Treasury is actively developing proposals for a radical overhaul of how British motorists pay for road usage, with speculation mounting that Chancellor Rachel Reeves will unveil a new pay-per-mile charging system specifically targeting electric vehicles. According to reports, the government is considering introducing a 3p per mile levy on electric vehicles from 2028, which could form part of the forthcoming Budget announcement scheduled for November 26.
Public Backing for EV Taxation with Clear Benefits
Research conducted by firm Stonehaven reveals significant public sentiment shifting in favour of electric vehicle taxation when linked to tangible infrastructure improvements. Their survey of 2,249 British adults found that 71% believe EV drivers should contribute at least some tax towards road maintenance, with only 14% arguing they should pay nothing. Crucially, support dramatically increases when respondents can see direct benefits: 61% would back an EV tax if revenues funded better charging networks, rising to an impressive 83% if the money addressed Britain's persistent pothole crisis.
Michael Dnes, Stonehaven's head of transport policy and former Department for Transport senior official, commented: "This polling shows the public are open to a fair deal on EV taxes. But making that deal fair will take some work. Right now, there are big differences in how easy it is to go electric, and the system favours people who own a house with a driveway."
Financial Implications and Industry Concerns
The proposed system would have significant financial consequences for drivers. Motorists covering 8,000 miles annually would face an additional £240 bill under the 3p per mile scheme. To put this in perspective, a journey from London to Edinburgh would cost approximately £12, while travelling from Cambridge to Bristol would add £5 to motoring costs.
However, motoring organisations have expressed serious concerns about the potential impact on electric vehicle adoption. AA president Edmund King acknowledged the Treasury's challenge regarding declining fuel duty revenues but urged the government to "tread carefully" to avoid slowing the transition to cleaner vehicles. He stated: "We need to see the detail of this proposal to ascertain whether these new taxes will be equitable or a poll tax on wheels."
The Treasury faces a substantial financial shortfall as more drivers switch to electric vehicles. Fuel duty generated just under £25 billion in the 2024/25 financial year, but these revenues are plummeting as EV ownership surges. Stonehaven's briefing paper warned that Chancellor Reeves confronts a "wicked problem" where electric vehicle taxes could dampen demand, ultimately hitting the very revenue targets they're designed to protect.
The consultancy recommended several measures to mitigate negative impacts, including establishing a "right to home charge", reducing public charging fees, and introducing reduced tax rates for current EV owners. Steve Gooding, director of the RAC Foundation, noted that the Treasury's "fuel duty cash-cow" is nearing its end and suggested that if the Chancellor proceeds with distance charging, she must "look at how to cut the cost of public charging for the millions of people who don't have the option to charge their cars at home."
Recent YouGov polling indicates that Britons are generally receptive to the concept, with 43% of respondents either strongly or somewhat supporting a pay-per-mile tax for electric vehicles, compared to 34% who oppose the idea.
