Drivers are increasingly paying a price for entering busy areas
raise nearly £40bn a year, or about 5% of Britain’s total tax revenue. Nearly 70% of that comes from duty on fuel, levied partly to deter consumers from using too much of the stuff. Yet as drivers take the hint and switch to electric and hybrid vehicles, the government faces a problem in the form of falling tax revenues. Economists are therefore rethinking how to tax motoring in a low-emissions future.
On October 8th the Institute for Fiscal Studies , a think-tank, warned that over £33bn could all but disappear as cars become more fuel-efficient or go electric. Revenue from fuel duty has already dropped from 2.2% ofin 2000 to 1.3% today . This decline is expected to continue as the government aims for “net zero” carbon emissions by 2050.Ministers could simply raise money by taxing other things, of course.
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