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Raise taxes on petrol and diesel cars 'to reduce EV premium', government urged

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Ministers have been urged to consider increasing taxes on petrol and diesel cars to reduce the “premium” associated with electric vehicle (EV) purchases.

The Resolution Foundation, an economic think tank, suggested the move should be taken if "concerns" persist over the number of EVs being bought.

The report from the think tank also called on the government to eliminate "arbitrary" tax breaks for EVs, arguing that they unfairly benefit higher-income drivers.

Benefit-in-kind incentives are limited to people whose employers provide company cars – which are often those earning larger wages – while salary sacrifice is pegged to an employee’s tax rate, meaning higher earners receive a bigger incentive. READ MORE: DWP issued warning over Universal Credit, PIP and other benefits as payments to increase The report stated: "The withdrawal of these tax incentives should be pre-announced, which would bring forward demand for EVs as motorists look to take advantage of them before they expire. "If, though, sales concerns persist, then ministers should look to increase taxes on new non-electric cars to reduce the premium associated with purchasing a new EV, rather than subsidise EVs any more." The think tank also highlighted the need to address the higher cost of public charging for EVs compared to home charging, estimating that using kerbside chargers instead of home-installed ones could cost around £425 a year based on average mileage.

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