Smart tech points to EV fuel tax
New law for domestic chargers opens the door for electric vehicle fuel duty levy
Smart technology to improve home charging of electric vehicles could create a mechanism for the Government to levy a new fuel tax.
From July, a new law will dictate that all government grant-funded domestic charging points for EVS must use smart technology to allow remote access by electricity suppliers over the internet.
The intention is to pave the way for a mass roll-out of EVS by ensuring that local distribution networks can cope with demand at peak periods. But the ruling could have a sting in the tail.
Once a critical mass of EVS is unleashed on Britain’s roads, the Government will be forced to find a way to replace the £27.2 billion per year it stands to lose in duty collected on petrol and diesel sales. The ability to monitor electricity usage for specific EV charging opens up the possibility of a new tax revenue stream.
The new compulsory smart technology regulation, announced on 14 December, enables one of the clauses that exists in the new Electric and Autonomous Vehicles Act 2018. It states that all government-funded charging points should be capable of being remotely accessed and receiving, interpreting and reacting to a signal.
In doing so, distribution companies can reduce the output or even delay charging for a couple of hours at peak periods to ensure the local network can cope as EV numbers escalate. Users have the option of overriding the smart function if they need the car in a hurry, however.
Because the smart charger will know how much electricity is being delivered to an EV and at what time, an additional fuel duty tax becomes viable.
James Mckemey, head of the Insights Team at smart charging point supplier Pod Point, agrees that the technology provides a method of independently metering the amount of energy used to charge EVS. “It’s achievable,” he said, “but it would still be complicated, because the information would come from hugely distributed places.”
But Mckemey concedes the taxing of en route public rapid charging would be relatively simple. Other difficulties would include plugging loopholes, such as the use of slow, 13A charging cables and the fact that thousands of basic charging points, which aren’t capable of smart charging, have already been installed.
Mckemey said government bodies he talks to are leaning more towards the idea of road pricing. Fuel duty is in effect an emissions tax, but EVS create no tailpipe emissions.
“It [road pricing] gives other opportunities,” Mckemey said. “With ANPR cameras all over the road network, it becomes more feasible.if you move your system away from taxing emissions, you can, for example, choose to incentivise road use and where. It’s a tool to penalise congestion to an extent. That’s one of the reasons they’re keen on it.”
Figures support the idea. According to Mckemey, UK motorists cover 323.7 billion miles annually. Total fuel revenue today is £27.2bn, so the equivalent would be
8.4p per mile if the tax were evenly spread. “You’d rather not be paying it, but it’s not Draconian,” he added.
A Treasury spokesperson said: “We currently have no plans to levy a new tax on charging points for electric vehicles. We keep all taxes under review and any changes to the tax system would be announced at the Budget and consulted on thoroughly in the usual way.”
Although the grant for plug-in hybrids has been discontinued and that for EVS cut by £1000, the Electric Vehicle Homecharge Scheme grants to install charge points are being maintained at £500.
More than 100,000 government-supported home charging points are already installed, but only a proportion use smart technology.