Ministers should consider increasing taxes on petrol and diesel cars to reduce the “premium” associated with buying electric vehicles (EVs), an economic think tank said.
The Resolution Foundation’s report recommends this step if “concerns” about the number of EVs purchased persist.
The inquiry also called on the UK government to scrap the “arbitrary” EV tax cut, saying the “unfairness” of the system meant it generally favored drivers on higher incomes.
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Benefit-in-kind incentives are limited to those whose employer provides a company car (often those earning higher wages), while salary sacrifices are fixed at the employee’s tax rate. Higher income earners will receive greater incentives.
The report states: “Removal of these tax incentives should be announced in advance so that demand for EVs is brought forward as motorists look to take advantage of them before they expire. .”
“However, if sales concerns persist, rather than further subsidizing EVs, ministers should consider increasing taxes on new non-electric vehicles to reduce insurance premiums associated with new EV purchases. It is.”
Taking steps to reduce public charging costs for EVs, which are higher than charging at home, should also be a “key focus”, the Resolution Foundation said.
The cost of charging an EV using a roadside charger instead of a home charger is estimated at around £425 per year, based on average mileage.
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Value-added tax on public charging should be reduced from 20% to 5%, bringing it to the same level as home charging, and measures should be introduced to ease supply issues and increase competition in public charging, the report says. I am making a recommendation.
The research also calls for the introduction of discounted train and bus fares for people who claim benefits or don’t own a car, and for airline passengers to pay fares that more accurately reflect the carbon footprint of their flights. It is also necessary to ensure that
Jonathan Marshall, chief economist at the Resolution Foundation, said: “If the UK wants to reach net zero by 2050, we need to accelerate the decarbonisation of travel.” That’s no small feat when you’re responsible for a third of carbon emissions.
“But the prize for doing so could be huge, with savings expected to be more than £20bn a year by the mid-2030s. A move to electric vehicles could reduce costs for drivers. But without further policy changes, there is a risk that all of these savings will flow to wealthier households.
“But with universal affordable charging for electric cars, targeted discounts on public transport and more inclusive carbon pricing for people who don’t want to give up frequent flyers, a just transition will be It is within our reach.”
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Steve Gooding, director of the RAC Foundation, a car research charity, said: “Tax breaks that favor wealthy households may be tough, but ultimately what will drive the transition to electric cars will be “These are wealthy motorists and vehicle buyers who are buying new cars.” Eventually, they find their way onto the more affordable second-hand market.
“It is clear that greater focus on public charging coverage, cost and reliability is needed to overcome remaining consumer wariness about EVs.”
Fiona Howarth, chief executive of EV leasing company Octopus Electric Vehicles, said: “Drivers want electric cars, but cost is the biggest reason they don’t buy one.”
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“The price of electric cars continues to fall, but until they are on par with old-fashioned gas-guzzling cars, we cannot afford to sacrifice pay to make these technology-packed cars available to everyone. It will be.”
Quentin Wilson, founder of EV advocacy group FairCharge, said: “It would be a grave mistake to eliminate salary sacrifice for EVs at a time when low-income drivers are beginning to understand the economic benefits.”
The Society of Motor Manufacturers and Traders (SMMT) said last month that private demand for new diesel vehicles was growing faster than pure battery electric vehicles.
Despite heavy discounts on EVs by manufacturers, the number of registrations for the former increased by 17.1% year-on-year, while the number of registrations for the latter increased by 3.6%.
However, EV lobby group Electric Vehicles UK claimed this was a “false alarm” as total sales of new electric cars, including those sold as company cars, increased by 24.4%.
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Neil Lancefield is Pennsylvania transportation correspondent.
