UK thinktank urges tax on self-driving cars to offset congestion and job losses
A UK thinktank has urged the government to tax self-driving cars now, warning of congestion and job losses. Wayve says a sector-specific tax would hurt innovation, while the GMB union says drivers need more support.
The report said government projections show that up to 40% of cars sold could be capable of self-driving by the middle of the next decade. It warned that individual ownership is likely to increase car usage at the expense of public transport and increase congestion, while autonomous vehicles would eventually make much of the work done by England’s 417,000 taxi and private hire drivers, including 121,000 in London, obsolete.
Introducing charges on self-driving vehicles now could ease the transition and provide a future revenue stream to replace dwindling fuel duty, according to the report. About £27bn a year is brought in by fuel duty, which is projected to disappear with the transition to electric vehicles. The thinktank calculated that by 2050, an AV charge set to match the social cost of congestion of about 88p per mile would raise £47bn per year. It urged taxes before AVs become commonplace, stating: “There is not yet a substantial constituency of AV owners who will resist a charge; once there is, taxing them becomes far harder.”
Department for Transport forecasts cited in the report say highly automated driving will bring a 24% rise in road miles by 2050, with significant effects on congestion and road speeds. The report also noted that almost half of the mileage covered by Waymo’s robotaxis in California occurs with no passenger on board, with the costs of an empty vehicle minimal without a driver to pay and driving around potentially cheaper than parking.
David Lawrence, one of the authors of the report, said the experience of fuel duty, introduced in 1909 before mass car adoption, showed it was best to build up before “a political fight later on – our view is that now is the time to do it.” He added that even if tax revenue does not peak until 2050, it would still affect 30-year bond yields today and could have an immediate impact on fiscal headroom.
Ministers have backed the rollout of autonomous vehicles as a “transformative opportunity” for the UK, heralding the start of robotaxi services in London this year as bringing “cutting-edge technology to British roads, creating thousands of jobs and unlocking billions for the economy by 2035.” Uber, partnering with Wayve, has started limited AV services in the capital, with Google’s Waymo and Chinese firm Baidu vying to join. Robotaxis already operate in the US, China and the UAE, and Europe’s first fully driverless taxi trials started in Zagreb, Croatia, this week.
Wayve said the proposed tax would “penalise the UK’s most promising innovators.” Sarah Gates, VP global affairs and assurance at Wayve, said AVs were “a major growth opportunity for the UK – an industry in which we hold a genuine competitive advantage” and would bring high-value jobs and corporation tax revenues from a share of a £700bn global market. She added: “A sector-specific tax at this early stage would undermine the government’s growth agenda and send precisely the wrong signal: that the UK will penalise its most promising innovators, rather than give them the conditions to scale and succeed.”
The GMB union, which represents taxi and private hire drivers, said a tax on AVs would not go far enough. Simon Rush, president of the GMB London region drivers branch, said: “Driverless cars threaten the livelihoods of private hire drivers and the businesses that depend on them. GMB has asked the government, TfL (Transport for London), and operators for a plan to reskill and redeploy drivers, but to date our questions have gone unanswered. An AV charge could go some way to mitigating the economic disruption caused by the rollout of these vehicles, but we need more.” Uber declined to comment.