The majority of UK consumers are saying “no” to the insurance premium tax (IPT) being levied on policies for electric vehicles (EVs)
Recent research conducted by The Green Insurer revealed that 62% of UK adults are in favour of a campaign urging the government to eliminate the 12% IPT on insurance coverage for EVs.
Many view the proposal as a potential catalyst to encourage a shift from conventional petrol or diesel cars to electric models, as part of an effort to diminish carbon emissions and enhance air quality.
The IPT, a levy applied to all general insurance premiums, has seen a twofold increase from 6% to 12% over the past decade and contributed £7.34 billion to government coffers last year.
The Green Insurer’s research revealed that opinions on abolishing IPT for electric vehicle insurance are divided. Among those opposing the idea, 52% argue that it would unfairly benefit electric car owners over petrol or diesel vehicle drivers.
Another 26% believe that exempting EV insurance from IPT would not significantly influence the transition to electric vehicles. Additionally, 18% oppose the idea on the grounds that the government cannot afford to lose the revenue generated by this tax.
The calls to scrap the tax may not be that surprising, given recent events. Recent research from the insurer revealed that car insurance premiums now account for more than one-quarter of motoring costs (27%).
Paul Baxter, CEO of The Green Insurer, commented on the findings, saying that they suggest that there is considerable support among the UK population for measures that reduce insurance costs for drivers of greener vehicles.
“We view this as an opportunity to align with the government’s environmental objectives and promote sustainability,” he said. “Lowering insurance costs for electric vehicles could not only make them more accessible but also expedite their uptake, contributing to the UK’s goals of phasing out petrol and diesel cars.”
“While there are concerns regarding the potential loss of revenue from the insurance premium tax, we are of the opinion that such measures could stimulate innovation and investment in the electric vehicle industry, leading to technological advancements and job creation in the long term,” Baxter said.
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