6 March 2024
If you are covering the news that fuel duty has been frozen for another 12 months, please see the following comment from Gemma Woodward, head of responsible investment at Quilter Cheviot:
“No Conservative Chancellor has dared get on the wrong side of motorists by announcing they’ll hike the duty and today ushers in no change in that policy.
“There was talk that the Chancellor would finally bite the bullet and increase the duty, but this has been shelved. In this current economic environment, with fuel prices still remaining high, it’s no surprise to see Hunt swerve the issue for yet another budget.
“But if the government is serious about reaching net zero by 2050 and is serious about incentivising the switch to electric vehicles, then they’ll need to take a long hard look at the taxes on motoring. Fuel duty freezes are unlikely to help encourage people to make the switch.
“Then there’s also the question of how the government intends on plugging the impending fiscal hole once electric vehicles become more and more popular. Vehicle excise duties are levied on CO2 emissions, meaning electric vehicle drivers do not pay any tax. Gradually, as more and more people adopt electric vehicles, the government’s tax receipts from vehicle excise duties, will reduce substantially. That said, the government has failed to build the infrastructure to support widespread adoption of electric vehicles.
“Increasing vehicle excise duties on electric vehicles could well be the answer, but this risks stunting demand for these cars at such a crucial time. Another solution would be for the government to introduce a pay-per-mile tax scheme, which would see drivers pay tax on every mile travelled with potential incentives on offer for drivers of electric vehicles, but this is going to be quite complex to implement.”
For more information, please contact Alex Berry on + 44 (0)7741151931
