\n<\/p>\n
I<\/span>f you want a document to give you sleepless nights, the Office for Budget Responsibility\u2019s biennial Fiscal Risks and Sustainability report is a go-to publication. This is the one that looks to the horizon and covers everything from demographic trends to state pension promises to the climate crisis.<\/p>\n The headline finding in this July\u2019s version was a true jaw-dropper. The UK\u2019s public finances are on an unsustainable long-term trajectory because government debt would rise to a remarkable 270% of GDP by the early 2070s \u2013 up from almost 100% today \u2013 if current policies were left unchanged.<\/p>\n The \u201cif nothing changes\u201d qualification is important because some of the risks to the public finances are so blindingly obvious \u2013 and have been for ages \u2013 that it is astonishing successive governments have ignored them. One is the certainty that government income from fuel duty will dwindle to next to nothing once we\u2019re all driving electric vehicles.<\/p>\n The July document spelled out the arithmetic. From expected revenues of \u00a324.4bn from fuel duty in 2024-25, a halving is projected by the 2030s and receipts will be close to zero by 2050. \u201cThis is an average \u00a315.5bn a year lost in fuel duty receipts, driven by the assumption all new cars and vans will be zero-emission by 2035 and new HGVs [heavy goods vehicles] by 2040,\u201d said the OBR.<\/p>\n The sums, to state the obvious, are huge. Indeed, fuel duty alone accounts for three-quarters of the revenues that will be lost to government arising from decarbonising the economy. Something plainly has to change on motoring taxes.<\/p>\n And here \u2013 finally \u2013 is a proposal. Rachel Reeves is considering using this month\u2019s budget to announce plans for a pay-per-mile tax for electric vehicles from 2028. A charge of 3p a mile for EVs, on top of other road taxes, would offset falling revenue from petrol and diesel cars.<\/p>\n Crucially, from a transition perspective, the numbers would still be loaded in favour of EVs. The suggested rate would work out at an average of \u00a3250 a year, a lot less than the average \u00a3600 that petrol and diesel drivers pay in fuel tax, which can itself be considered a pay-per-mile charge. Enforcement remains an unanswered practical problem if Reeves\u2019s system will rely on EV drivers estimating their mileage themselves. But the principle is sound: the Treasury cannot afford to let motoring taxes disappear.<\/p>\n Naturally, the idea provoked howls from predictable quarters. The Society of Motor Manufacturers and Traders said that at such a pivotal moment in the UK\u2019s transition towards EVs, it would be \u201cthe wrong measure\u201d.<\/p>\n The car salesmen need to get real. It is their sort of \u201cnot the right time\u201d thinking that has made the problem of evaporating fuel duties so urgent. It would have been better to start reform incrementally half a decade ago, as the Institute for Fiscal Studies was urging at the time. From its 2019 report: \u201cThe government needs to rethink how it taxes motoring. It should start now, before the revenue disappears and expectations of low-tax motoring become ingrained.\u201d Quite. The issue has been dodged for too long.<\/p>\n Reeves\u2019s proposal is too blunt to tackle the costs of congestion, the other problem identified by the IFS, but it\u2019s better than letting the pressure on Treasury receipts build and build.<\/p>\n If the UK can\u2019t rejig motoring taxes to keep up with changes in technology, it hasn\u2019t a hope of easing bigger headaches in the OBR\u2019s book of scary projections, such as rising pension and healthcare costs. Reeves should implement her pay-per-mile idea. Most EV drivers, one suspects, will see the fairness.<\/p>\n","protected":false},"excerpt":{"rendered":" If you want a document to give you sleepless nights, the Office for Budget Responsibility\u2019s biennial Fiscal Risks and Sustainability report is a go-to publication. This is the one that looks to the horizon and covers everything from demographic trends to state pension promises to the climate crisis. The headline finding in this July\u2019s version<\/p>\n","protected":false},"author":1,"featured_media":32445,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[6458,1689,4166,719,12600,6459,4167,18729,4168,101],"class_list":{"0":"post-32444","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-afford","9":"tag-cars","10":"tag-chancellor","11":"tag-electric","12":"tag-howls","13":"tag-ignore","14":"tag-nils","15":"tag-paypermile","16":"tag-pratley","17":"tag-tax"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/32444","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32444"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/32444\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/32445"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32444"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32444"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32444"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}