Think tank calls for driverless cars to be taxed to offset job losses

Taxes on driverless cars should be introduced in the UK now to offset rising congestion and the threat to jobs it poses, think tanks say.

The first robotaxis on London’s streets only began appearing this month, but the government predicts that by the middle of the next decade, up to 40% of cars sold will be capable of self-driving.

Widespread adoption of autonomous vehicles (AVs) will put hundreds of thousands of private sector jobs at risk, while individual ownership will likely lead to increased car use at the expense of public transport and increased congestion, the report said.

According to a report by the Center for British Progress, a non-partisan think tank focused on economic growth, introducing a charge for driverless vehicles now could ease the transition and provide a future revenue stream to replace falling fuel duties.

Wayve, the British technology firm developing self-driving cars, said it would “punish the UK’s most promising innovators.”

Around £27 billion a year comes from fuel tax, which is predicted to disappear with the shift to electric cars.

While the report acknowledged the potential safety benefits and the creation of a variety of skilled jobs in the sector, it said ministers should act early to mitigate the impact on the 417,000 taxi drivers and private hire workers in England (121,000 in London) as “driverless vehicles will ultimately make much of this work obsolete.”

It notes that nearly half of Waymo’s robotaxi miles in California come without a passenger on board, that the cost of an empty vehicle is minimal without paying the driver – and that getting around is potentially cheaper than parking.

The Department of Transport predicts that highly automated driving will lead to a 24% increase in road miles traveled by 2050, which will have a significant impact on congestion and speeds.

Taxes must be introduced now before self-driving cars become commonplace, the report says. It says: “There is not yet a significant group of AV owners who will resist charges; Once they are there, it becomes much harder to tax them.”

The think tank estimates that by 2050, AV charges set according to the social cost of congestion (around 88p per mile) will generate £47 billion a year.

David Lawrence, one of the report’s authors, said the experience of the fuel tax, introduced in 1909 before the mass adoption of cars, showed it was best accumulated before “later political infighting begins – we believe now is the time to do it.”

He added: “In terms of the behavior of bond markets, even if tax revenues don’t peak until 2050, that will still impact your 30-year bond yield today, which the government will obviously have to deal with. That could have an immediate impact on the fiscal buffer, even if actual revenues don’t materialize until much later.”

Ministers have backed the introduction of driverless cars as a “transformative opportunity” for the UK, hailing the launch 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 launched limited AV services in the capital, with rivals from Google’s Waymo and Chinese firm Baidu. Robotaxis are already operating in the US, China and the UAE, and Europe’s first trials of fully driverless taxis began this week in Zagreb, Croatia.

Sarah Gates, vice-president of global communications and security at Wayve, said driverless cars represented a “major growth opportunity for the UK – an industry where we have a real competitive advantage” and would bring high-paying jobs and corporation tax revenue to a global market share of £700 billion.

She added: “A sector-specific tax at this early stage would undermine the government’s growth agenda and send exactly the wrong signal: the UK would be punishing its most promising innovators rather than giving them the conditions to scale and succeed.”

The GMB union, which represents taxi drivers and private hirers, said the tax on driverless cars would not go far enough. Simon Rush, president of GMB London Drivers, 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 to develop a plan to retrain and redeploy drivers, but so far our questions have gone unanswered.

“AV fees could go some way to mitigating the economic downturn caused by the adoption of these vehicles, but we need more.”

Uber declined to comment.