According to a report from the Resolution Foundation, an economic think tank, ministers should consider increasing taxes on petrol and diesel vehicles to help lower the “premium” on electric vehicle (EV) purchases.
The report suggested this step if “concerns” remain about the uptake of EVs. It also called for the Government to eliminate “arbitrary” tax breaks for EVs, which disproportionately benefit higher-income drivers.
Currently, benefit-in-kind incentives are mainly available to those with company cars, who tend to earn more, while salary sacrifice schemes offer larger incentives to higher earners due to their tax rates.
The report stated: “The removal of these tax incentives should be pre-announced, which would drive demand for EVs as buyers seek to benefit before they expire.”
However, if concerns over sales persist, the report recommends that ministers increase taxes on new petrol and diesel vehicles to reduce the price gap between them and EVs rather than continue to subsidise electric vehicles.
