Nations Advance EV Mileage Taxes to Address Shifting Transportation Revenue

The UK Treasury recently unveiled its final plan for an electric vehicle (EV) road usage charge, proposing to levy a mileage-based tax starting April 1, 2028. Fully electric vehicles and hydrogen fuel cell vehicles registered nationwide will be charged 3 pence per mile (approximately RMB 0.28 per kilometer), while plug-in hybrid electric vehicles will be charged 1.5 pence per mile (about RMB 0.14 per kilometer). Once implemented, the UK will become the first country in the world to introduce a nationwide mileage tax on electric vehicles. Prior to this, New Zealand reinstated a road user charge based on distance traveled for EVs in April 2024. Iceland plans to implement a uniform mileage fee for all vehicles starting February 1, 2026, while abolishing its current fuel tax. Countries such as Germany, Austria, and Switzerland are also exploring similar mechanisms, and pilot programs have already been launched in places like Hawaii, USA. These measures aim to address declining transportation-related government revenues caused by the ongoing shift in automotive energy sources. Traditional taxation models reliant on fuel consumption have become unsustainable due to the growing adoption of EVs, leading to fiscal imbalances. A mileage-based tax removes dependence on vehicle powertrain type and more accurately reflects road usage intensity and associated infrastructure wear-and-tear costs, thereby filling the taxation gap for new-energy vehicles. The UK’s approach features differentiated rates and includes provisions to adjust the tax annually from the 2029–2030 fiscal year onward in line with the Consumer Price Index (CPI). Based on an average annual mileage of 8,000 miles, owners of fully electric vehicles would see an additional annual tax burden of approximately £240—though their overall vehicle operating costs would still remain lower than those of conventional internal combustion engine vehicles. New Zealand has integrated EV charges into its existing road user charging system, while Iceland is transitioning comprehensively to a mileage-based model. As the EV market matures, supporting technologies such as connected and intelligent vehicle systems now enable accurate mileage tracking, laying the groundwork for implementing mileage taxes. However, countries still face challenges during rollout, including public acceptance and debates over fairness. Balancing industrial transformation with fiscal and tax reform remains a critical consideration in policy design.