Monday, May 20, 2024
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In a land of electric cars, what about the lost billions in fuel tax?


UK politicians have banned the sale of petrol/diesel vehicles after 2040 to reduce the UK’s insignificant 1.3 per cent of global emissions. The SNP-dominated Scottish Government, always keen to show that they are far better than Westminster and ‘Scotland leads the world in —– ’ ( insert your favourite virtue here), gleefully came up with the date 2032. Scotland’s emissions are a minuscule 0.13 per cent, so that should make a huge difference in the quest to keep global temperatures 1.5 to 2 degrees C above pre-industrial levels. Friends of the Earth Scotland have said it is at present heading for 3 to 4 degrees C above pre-industrial levels.

As electric cars (EVs) become increasingly popular in the UK, the government will suffer a massive loss of taxes from fuel duty and the VAT thereon. So what taxes are going to replace the 57.95p fuel duty plus VAT of 11.59p = 69.54p on every litre of fuel? The fuel duty provides £28billion every year to the Exchequer plus another £5.6billion in VAT. There will be a serious and accelerating decline in this revenue as more EVs are bought, so what plans do the government have to recoup the fuel duty lost? Then there is the cost of the tens of thousands of charging points required for EVs and where all the extra electricity will come from. These issues have not been raised in Parliament.

EVs can be afforded only by the rich, who at present get a grant of up to £3,500 to buy the vehicle and a further £500 for a home charging point. Some local authorities provide free electricity and free parking. Those who cannot afford an EV will be forced on to public transport and endure the well-publicised failings.

So while urgent action is needed to address these issues it seems that politicians are waiting and hoping for a golden unicorn or a green fairy to come along with plans for planting money trees.

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Clark Cross
Clark Cross
Clark Cross is a retired chartered accountant, finance director and managing director. He lives in Scotland.

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