Plans to charge motorists to use the UK’s roads are being considered by chancellor Rishi Sunak in a bid to claw back £40bn in tax revenues lost by switching to electric cars.
Sunak has been given the new Treasury proposal in light of Boris Johnson’s plan to ban the sale of new petrol and diesel cars from 2030.
The ban, set to be announced this week by Johnson alongside a ten-point climate change plan, will significantly reduce government revenue from fuel duty.
The Times is reporting that the chancellor is “very interested” in the idea of bringing in a road pricing scheme to plug the £40bn black hole left by fuel duty reduction.
Fuel duty is charged at 57.95p a litre on petrol and diesel vehicles and is expected to raise £27.5bn this year alone.
Vehicle excise duty will raise £7.1bn this year, while VAT on fuel is worth £5.7bn.
Automobile Association president Edmund King told Sky News: “The government can’t afford to lose £40bn from fuel duty and car tax when the electric revolution arrives.
“It is always assumed that Road Pricing would be the solution but that has been raised every five years since 1964 and is still perceived by most as a ‘poll tax on wheels’.”
A Treasury source told The Times: “The Treasury regularly explores lots of different policy options. This is no different.”