As we move towards using electric vehicles in the long term the government may have to introduce road tolls for motorists. Currently fossil fueled vehicles raise around £1100 in tax revenue for the government through road tax and fuel duty. Electric vehicles are taxed at lower rate to encourage consumers to switch to them. On average electric vehicles contribute £320 in tax revenue. Consequently, this creates less revenue for the government putting more pressure on state finance, especially at a time when we have a deficit.
If the government were to introduce road tolls this could helped to raise the much needed finance required. It will also help to reduce congestion as the cost of motoring will rise. Britain has over 35 million vehicles on the road and our roads are becoming more congested.
The introduction of the scheme would see road users charged different prices for the time of the day they choose to use their car. However, some suggest that such a scheme may be unfair for some vehicle owners who need to travel at peak hours for work and those on lower incomes. The charging scheme would also need lots of cameras installing and maintaining so that drivers journeys could be monitored. This could raise the cost of such a scheme.
Tasks
1:) Draw an externalities diagram and explain how this scheme could help to reduce congestion.
2: Evaluate whether a toll charging system for electric vehicles will be beneficial for the economy?
Original article taken from The Guardian. https://www.theguardian.com/business/2021/sep/12/road-pricing-may-be-the-best-option-as-number-of-electric-cars-rises?CMP=Share_AndroidApp_Other
Econgreenwood 