Petrol and diesel owners could be hit with new ‘carbon taxes’ (Image: Getty)
Experts have warned drivers could be hit with new “ to due to falling and fuel duty revenues.
stressed that new environmental taxes could “leverage additional revenue”.
Fuel duty is paid by motorists every time they fill up at the petrol station
This currently raises around £25billion every year as more motorists switch to electric or hybrid vehicles.
A pay-per-mile scheme has previously been hinted at being a replacement for falling fuel duty costs
Motorists pay fuel duty when they fill up at petrol stations (Image: Getty)
The CCC admitted the Government would “need to make plans to address the loss in revenue from fuel duty”.
Their new ‘Seventh Carbon Budget’ report reads: “Environmental taxes such as carbon taxes could be used to incentivise households and businesses to shift towards low-carbon technologies.
“This could leverage additional revenue in the short term, although if taxes are effective in shifting behaviour, then this revenue would not last.”
According to the CCC, fuel duty revenue makes up around 47% of the UK’s environmental taxation receipts.
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However, with EVs not filling up at petrol stations and therefore have no fuel duty fees.
Analysis shows that electric cars are expected to make up 80% of vehicles on UK streets by 2040, up from just 2.8% today.
Meanwhile, zero-emission electric models will make up to 74% of vans by this date, an increase on the current level of just 1.4%.
The CCC added: “Without an increase in the rate of fuel duty, we expect to see fuel duty tax receipts decline rapidly, leading to a gap in revenue for the Exchequer.
“If fuel duty remained at the same rate as today, falling demand for fuel for vehicles would result in revenues being about a third lower in 2030 than levels in 2023 (£25 billion).”
But, electric car owners will pay some form of road tax this Spring with motorists facing Vehicle Excise Duty (VED) costs from April 1, 2025.
Owners will pay the £195 standard rate for models built after 2017 but some models could be slapped with an additional £425 Expensive Car Supplement (ECS) charge.