Electric Cars May Cause Tax Headache for the UK

June 27, 2017 Taxation in UK

electric cars in the UKLONDON – Electric cars may be better for the environment, but they may also be taking the UK down the road to a multi-billion pound budgetary shortfall.

The government of the UK is facing a GBP 23 billion gap in its budget if it continues to encourage motorists to switch to electric vehicles, according to new research released on June 26th by the think-tank Policy Exchange.

The UK government is banking on the presumption that the collection of fuel duty in the country will keep rising over the coming decade, hitting as much as GBP 40 billion per year in 2030, up from the current level of GBP 28 billion per year.

However, the think-tank has now suggested that the income goal does not factor in the government’s own effort to meet green targets.

It is expected that the push to reduce carbon emissions in order to meet green goals will reduce the number of petrol and diesel cars on the road, to be replaced with electric vehicles.

If the government does manage to meet its green goals, then the tax revenues it will see from the collection of fuel duty will fall to a level of between GBP 17 billion per year and GBP 31 billion per year.