Here’s why this is a bad idea…
Thanks to the anticipated switch from gasoline- and diesel-powered cars in the UK, the Commons Transport Select Committee is reportedly asking the government to look into a new tax based on miles driven. This isn’t a new concept as it’s been floated in other countries, including here in the United States where Transportation Secretary Pete Buttigieg is researching something similar. And while at first it might sound fair to tax people per mile driven since taxing fuel won’t be possible in the much-anticipated electrified future, there are some big problems with this and similar plans.
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Currently, like in the United States the UK government places a tax on fuel. Ostensibly, the funds are used to maintain the roads, and while I can’t speak for our friends on the other side of the pond, I do know here politicians regularly move funds from the fuel tax to pet causes, often leaving roads in poor repair. That aside, with EVs growing more common, this would mean the tax burden isn’t shirked by those freeloading electric car owners.
Here's the first problem with this plan: to track how far people are driving and tax them accordingly, the proposal is that the UK government would use “telematic technology.” This would do more than just log miles driven as it also acts as a tracker, allowing the government to see everywhere you go. That’s a huge violation of privacy. And for those who think officials would only look at miles driven and nothing more, some let it slip during the lockdowns that they were tracking citizens’ cellphones to see who was complying with orders.
A similar vehicle tracking mechanism is being explored here in the US. Supposedly, taxing people for the miles they drive will decrease congestion as pleasure driving is discouraged. But here’s the second problem: low-income individuals are affected by these per-miles-driven taxation plans the most.
Driving until you qualify is a reality the elites in many countries simply don’t understand. Most can’t afford to live near where they work, etc. That means having to commute a fair distance every day. With less disposable income, these lower-income households will be hit harder by a taxation-by-the-mile setup.
In the past, people in that kind of a situation have been able to grab a cheap, highly efficient car for commuting. That means while they’re paying the same amount of tax for each unit of fuel as someone who has a big, gas-guzzling vehicle, the amount of tax per mile they drive is far less. By taxing everyone the same amount per mile would annihilate that advantage.
Keep in mind the UK government announced back in November the sale of pure internal combustion engine cars would be moved from 2040 to 2030. That means some new vehicles will be hybrids and so they’ll use some fuel, but obviously electricity will become the new petrol for the country.
Obviously, the UK government needs to collect taxes to maintain the roads, otherwise the little island nation will start looking like the state of Michigan with gigantic potholes everywhere. However, there are problems with the proposed plan. And it can’t be a coincidence that eerily similar plans are being developed in the US and other nations.
There is a silver lining with this proposal. Reportedly, the new taxation-by-the-mile plan will be revenue neutral. In other words, UK citizens wouldn’t pay more than they already do in fuel taxes. If you believe the government has that kind of discipline, I guess you’re comforted by that. Otherwise, you’re not going to like this proposal in the least.