Thinktank proposes tax on autonomous vehicles

A UK thinktank has called for autonomous vehicles to be taxed before they reach mass adoption, arguing that policymakers should prepare for their effects on driving jobs, congestion, public transport, and government revenue.

The Centre for British Progress wants ministers to establish a charging framework while the autonomous-vehicle market remains small rather than attempting to introduce a new tax once the technology has become widely used.

The proposal follows the start of autonomous passenger services in London. Wayve and Uber began supervised autonomous rides in the capital earlier this month, bringing British-developed AI driving technology into commercial ride-hailing journeys.

The thinktank points to the potential effect on England’s 417,000 taxi and private-hire drivers, including 121,000 in London, if autonomous fleets substantially reduce the need for human drivers.

It also expects widespread adoption to change road use. Department for Transport forecasts cited by the organisation suggest highly automated driving could increase road mileage by 24% by 2050.

One concern is that autonomous vehicles can travel without a passenger. A robotaxi can reposition itself between customers or remain in circulation rather than paying to park, creating additional mileage that would not necessarily occur in a conventional driver-operated system.

The Centre for British Progress has modelled a future charge linked to the social cost of congestion. Under its assumptions, a rate of around 88p per mile in 2050 could raise approximately £47bn annually.

That figure depends on adoption levels, road use, pricing, and technology that remain highly uncertain over a period of more than two decades. It is therefore better read as a scenario illustrating the possible scale of a future tax base than as a forecast of revenue the government can expect to collect.

The thinktank’s broader argument is that the principle of charging should be established before a substantial population of autonomous-vehicle owners and operators develops an interest in resisting a new levy.

Fuel duty adds another fiscal dimension. It currently raises around £27bn a year, but revenue is expected to decline as petrol and diesel vehicles are progressively replaced by electric models.

Autonomous driving and electrification are separate technologies, but many robotaxi deployments use electric vehicles. A future road-pricing framework could therefore become part of the wider question of how governments tax motoring as receipts from fuel fall.

The proposal has already drawn opposition from the autonomous-driving sector. Wayve said a dedicated charge would “penalise the UK’s most promising innovators”.

The disagreement highlights a tension in UK technology policy. Ministers want Britain to become an important market for autonomous driving and to capture investment, technical jobs, and intellectual property from the sector, while the same technology could create costs elsewhere in the economy.

Employment is one example. Autonomous fleets may create work in software, engineering, fleet management, vehicle maintenance, remote assistance, safety, mapping, insurance, and data operations while reducing demand for conventional drivers.

Those jobs are unlikely to match displaced driving roles one-for-one. They may require different qualifications, be concentrated in different parts of the country, and emerge on a different timetable from the jobs being automated.

That makes workforce transition as important as the headline number of roles potentially exposed.

Congestion presents a different policy problem. If autonomous travel becomes cheaper and easier, people may choose cars for journeys previously made by public transport, while empty vehicle movements add mileage without carrying passengers.

A tax could be designed in several ways. A flat charge on autonomous vehicles would be simple but would not distinguish between journeys according to their effect on congestion. Mileage-based pricing could reflect use more closely, while time- or location-sensitive charges could target the most congested roads.

Each approach would create different consequences for ride-hailing operators, logistics companies, delivery businesses, fleet owners, private motorists, and technology developers.

The choice would also determine the objective of the policy. A charge designed mainly to replace fuel duty could look different from one intended to discourage congestion or fund retraining for workers displaced by automation.

Commercial deployment remains at an early stage. Wayve and Uber’s London service is supervised, and the wider regulatory system for fully autonomous vehicles is still developing under the Automated Vehicles Act.

That gives policymakers time to decide how taxation, road pricing, employment policy, and public-transport objectives should interact before autonomous fleets reach much larger scale.

The Centre for British Progress is arguing that the tax question should be settled early. Whether ministers accept that approach will depend on how they balance the potential economic gains from a domestic autonomous-driving industry against congestion, labour-market disruption, and the long-term erosion of existing motoring taxes.