Chancellor Rachel Reeves is being urged to introduce controversial pay-per-mile car tax changes or the Government could risk a "black hole" in public finances.
Labour will unveil its first Budget on October 30, with Prime Minister Keir Starmer already warning of "painful" changes that will be needed to address the financial situation.
An organisation has warned that the Government will massively lose out on revenue from fuel duty in the coming years as drivers transition to electric vehicles and away from petrol and diesel.
Some have estimated that this could cost the Government between £25billion and £35billion a year next decade as fuel consumption wanes across the country.
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Rachel Reeves will deliver the Budget on October 30 GETTYThe Campaign for Better Transport (CBT) is now calling on Rachel Reeves to impose a pay-per-mile car tax scheme which would see all motorists, including electric vehicle owners, charged based on how much they drive.
Under the plan from the CBT, drivers with a zero emission vehicle would be exempt from paying, if they had the car or van before the scheme was implemented.
Experts say this would massively help motorists switch to electric vehicles as they would see their motoring bills reduced even further, alongside lower running costs.
Silviya Barrett, director of policy and campaigns for the CBT, said: “The new Chancellor faces a looming black hole.
"She can avoid it, in a way which is fair and which garners broad public support. But she should start now, as this issue will only get more pressing."
Road pricing schemes, like pay-per-mile, have previously been met with resistance from drivers and experts, saying it could impact working families and rural motorists disproportionately.
Barrett has written to Rachel Reeves to urge the Chancellor to consider using the pay-per-mile scheme, which would involve "simple charges" based on "regular odometer readings".
She added: "It should be cheaper to drive a zero-emission vehicle than a more polluting vehicle, but it’s only fair that these drivers should pay a share, and a pay-as-you-drive model can achieve this."
The CBT leads an organisation which consists of 37 transport-related organisations, with all groups supporting "a Treasury move on vehicle taxation".
One of the members, the RAC, stated that a road pricing scheme was needed as a "replacement form of taxation" to avoid losing billions of pounds in revenue for the Government.
It added that the new system needed to be "simple and fair" for petrol, diesel and electric vehicle owners, regardless of how often they travel.
The Confederation of Passenger Transport added that pay-per-mile car taxes would "curb congestion" and make public transport more attractive - slashing emissions in the process.
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Electric vehicles registered after the proposed implementation point will be charged
GETTYWhile the Chancellor has committed to not increasing National Insurance, VAT or income tax, there are some fears that "difficult decisions" have to be made in the October Budget.
A spokesperson for HM Treasury told GB News: "We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets."
