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Jonathan Punter

| 26 November 2020

UK Economy, Technology

Jonathan Punter

Tripping point: why talking tax signals a clear road for electric cars

Electric cars are back in the headlines and, given the times we live in, we ought to be pleased they are.

It is, at least, a nudge that there is some thought being given to what’s over the covid horizon, as it appears to be edging closer.

It’s encouraging because it corresponds to themes to which I regularly return on this blog. Namely, how technology keeps transforming our lives now, and the question of what those changes will mean in the long term.

Battery power is increasing exponentially as those sales rise at a faster pace than the combustion-driven sector, albeit at a fraction of the volume. More than 20 new plug-in models are expected to be launched in the coming months as investment made in new platforms reaches production point.

Tax siphons stilled

So better batteries, more models, even more charging points and the vision of a greener, cleaner Britain on the back of this innovation. What’s not to like?

The government already offers grants for electric vehicles below a certain price, with the hint of more support to come.

But on the downside, the flagged reduction in fossil-fuelled transport is bad news for the Treasury, which is anticipating a steady draining away of the estimated £40bn a year siphoned from petrol pumps as motorists plug in instead of pour.

While I can’t envisage anyone shedding a tear on their behalf, this is perhaps more of a significant factor than expanding choice and increased efficiency of all vehicles electronic.

The fact that we’re at the start of what will turn into a structural undertow, dragging away a hefty chunk of the tax revenue in the years ahead, means we have some decisions to take.

Pay-as-you-drive

The government is already floating the possibility of pay-per-mile regime to address this potential gap. The RAC’s snap survey even found 44 per cent were in favour of it as long as the revenue raised were ringfenced for roads only and not just dissolved into the State pot marked: whatever we need it for.

Bearing in mind that pension funds worldwide invest in oil and gas and the implications for this shift reach a bit deeper, especially as the deadline to switch off diesel and petrol engines is set to be brought forward ten years to 2030 here.

During this year, we’ve all been given another perspective in how – and why - we travel, given the restrictions we’ve lived under. I’m not sure we’ll take it quite so much for granted from hereon in.

While we’re on the subject of freedom, this advance does pose a question around just how this principle may be monetised in practice.

Are our vehicles to be chipped so we are constantly tracked – and automatically charged - wherever we are? Does the rise in electrified bikes and scooters lend itself to another potential revenue stream?

And, as a colleague points out, once this process proves successful, is the next logical “step” billing people to walk on pavements?

Without wanting to overstate the point even in this age of mushrooming conspiracy theory, do we just become winking nodes on a gigantic digital matrix or retain the status of private citizen?

Broadly, however, what’s being proposed is a positive. The fact that we appear to be making progress on something which ought to improve life for most of us should be welcomed.

Let’s hope the muted sound of less traffic we hear at the moment is the template for quieter times on the road in years to come. And if the only raised volume is the debate on what it costs and for what reasons, that’s to be encouraged.

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During this year, we’ve all been given another perspective in how – and why - we travel, given the restrictions we’ve lived under.

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