All cars could be fitted with tracking devices which monitor where and when they are driven as part of huge changes to how vehicles are taxed.
A parliamentary committee has said that black box - or telematics - devices are the only viable way to implement a new road pricing type of taxation being considered.
The Transport Select Committee has warned that unless the UK’s vehicle tax system is completely overhauled, the Treasury will face a £35 billion annual loss of income as drivers move to electric cars.
It proposes a pay-per-mile road pricing approach to maintain income from motorists and says that vehicle tracking devices are the best way to implement this fairly.
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These devices would track how many miles a car is driven as well as times and locations, and transfer this real-time data to a “pricing mechanism” which would allow charges to vary depending on usage.
In its report, the committee said: “If motoring taxation is linked to road usage, the committee has not seen a viable alternative to a road pricing system based on telematics.”
The report also warned that any system using telematics should not see drivers pay more than they currently do and must not unfairly hit high-mileage drivers or those in rural areas who rely on their cars.
It said: “The Government must assess the potential effect of a road pricing mechanism based on telematic technology on high-mileage drivers, such as road hauliers and those in rural communities, and on those least able to adapt to increased motoring costs.”
It also said that the Government needed to assess how the technology might affect drivers’ behaviour and its wider policies on air quality, congestion, public transport and public health.
The Government wants to ban the sale of all petrol and diesel cars by 2030 and the committee’s report warns that the loss of revenue from fuel duty and from vehicle excise duty will hit finances hard. VED is calculated on emissions and EVs are exempt from charges at the moment.
The committee’s chair, Huw Merriman, said the UK faced a “£35 billion black hole in finances unless the Government acts now”.
“That’s 4% of the entire tax-take. Only £7 billion of this goes back to the roads; schools and hospitals could be impacted if motorists don’t continue to pay.
“We need to talk about road pricing.
“Innovative technology could deliver a national road pricing scheme which prices up a journey based on the amount of road, and type of vehicle, used.
“Net-zero emissions should not mean zero tax revenue.”
Sales of electric vehicles soared in 2021 and the pattern is expected to accelerate as the 2030 ban approaches and more and more manufacturers shift towards all-electric line-ups.