Simpler tax system for EVs proposed by emission experts

A new study has found that cars should be taxed based on vehicle weight and miles travelled.

The study by emissions experts Nick Molden, CEO of Emissions Analytics, and Felix Leach, Associate Professor of Engineering Science at the University of Oxford, argue this would be a much simpler system than the one used currently.

Molden and Leach will be releasing their new book, ‘Critical Mass: The One Thing You Need to Know About Green Cars,’ on 25th November and 2nd December at Keble College, Oxford, and Imperial College, London, respectively.

They will outline proposals for a simpler, more environmentally-credible road tax system: if an average car is 150kg lighter or does 1,000 fewer miles, the owner would pay £100 less annually.

Their book outlines that the current system for Vehicle Excise Duty (VED) is a flawed “mishmash of incentives and penalties.”

Former secretary of state for the environment and deputy prime minister, Michael Heseltine, said: “I welcome this contribution to the most important challenge of our time.”

Their book launches at a critical time, as next year road tax will undergo a major overhaul, including Electric Vehicles (EVs) that are currently exempt from VED.

From 1st April 2025, EVs will lose their VED exemption, so new EV buyers will need to pay the next lowest first-year tax rate, currently standing at £10. Once an EV reaches its second year on the road, owners will need to pay the standard VED rate, currently £190 and set to increase with inflation from April 2025. This legislation will also affect buyers of EVs costing over £40,000 with additional tax, as well as used EV and hybrid buyers.

Molden and Leach assert that their solution is not only better for the environment, but also simpler to administer and understand, which is important in making sure the public are able to make environmentally-conscious decisions.

Molden explained: “Taxing a car on a combination of its weight and mileage offers a simple, potentially universal approach to pricing-in the environmental impact of cars while at the same time overcoming the objects to the current mist-mash of incentives and penalties.

“In our book, we offer an intuitive ‘proof’ of why mass and distance are fundamental to designing a system to incentivise the purchase of ever-greener cars and this is contrasted with other flawed bases for judging environmental impact, such as measures of vehicle efficiency, including energy and fuel efficiency, as well as elements incorporated in the current system such as fuel type and laboratory carbon dioxide emissions.”

Accordingly to Molden and Leach, smaller cars will be cheaper to tax. Taxing cars based on weight and mileage is easier for the car-buying public to grasp, and put an end to car manufacturers increasing the size and weight of their models without punishment.

Leach elaborated: "Specific tax rates are proposed and compared to existing taxes to illustrate winners and losers — winners being small city cars and losers including high-mileage heavy cars and SUVs.

“The concept proposed is a reliable revenue-raiser at a time of widespread fiscal pressure and declining vehicle taxation. It could also be adopted rapidly and transitioning to it is easy.”

Molden strongly believes that deploying one measure of car’s environmental credentials to guide purchase and government policy is the way forward, specifically focusing on the measure responsible for three-quarters of the car’s environmental impact: weight. This metric neatly correlates with environmental damage.

Molden added:

“Most people want to do the right thing environmentally when they are buying a car, but the information and choices are now too complex for any normal consumer to understand fully. The question was whether there is a simple, practical way to point the car buyer in the right environmental direction and allow governments to tax and subsidise the right things — and there is.”