The Autumn Budget 2021 has failed to address much needed Road Tax reform, with the Government accused of 'kicking the can down the road' on the future of VED.
The mass uptake of electric cars in the UK is predicted to create an annual £37 billion fiscal hole in the Government's finances, with EVs currently attracting zero or reduced Road Tax.
Last week, the Treasury’s Net Zero Review issued a stark warning, saying tax receipts from the existing VED system will "decline towards zero”. Yet the review failed to address how the Government should address this problem. And Chancellor of the Exchequer, Rishi Sunak, made no mention of it in the 27 October Budget and Spending Review. The lack of detail has drawn criticism from industry experts.
Stephen Joseph, transport policy consultant, said: “The Government can’t keep kicking the can down the road forever. Everybody knows that if we’re moving towards electric vehicles, the Government is going to have to find a way of replacing the revenue it currently gets from fuel duty.”
Caterina Brandmayr, head of climate policy at Green Alliance, said: “While the Treasury is faced with the inevitable drop in fuel duty revenue in the coming years, it remains silent about any plans to reform road taxation.
“But the Chancellor cannot delay this much longer, as doing nothing is not an option, and sudden tax changes are unlikely to go down well with the public.
“That’s why the Government should urgently start a conversation around what a fairer and more sustainable road tax system should look like.”
Road pricing has been tipped as one possible solution by the House of Commons Transport Select Committee with a report expected in the coming weeks.
However, with road pricing receiving mixed reviews from drivers, it remains to be seen which direction the Government will take. And industry commentators are frustrated that the future of Road Tax VED was ignored during the latest Budget.
