A British thinktank is calling for taxes on self-driving vehicles to be introduced now, before robotaxis become widespread, to offset threats to hundreds of thousands of taxi driver jobs and rising congestion costs. The proposal comes as Waymo, Uber, and other autonomous vehicle operators begin rolling out services in major cities, with government projections suggesting up to 40% of cars sold could have self-driving capability by the middle of the next decade.

Why Are Policymakers Worried About Robotaxis Now?

The timing of this debate is striking. Robotaxis only began operating on London's streets this month, yet the Centre for British Progress, a non-partisan thinktank focused on economic growth, is already warning that widespread autonomous vehicle adoption poses significant risks. England has 417,000 taxi and private hire drivers, with 121,000 concentrated in London alone. The report argues that self-driving vehicles will eventually make much of this work obsolete.

Beyond employment, the thinktank raises concerns about how robotaxis might reshape urban transportation patterns. Individual ownership of autonomous vehicles is likely to increase car usage at the expense of public transport, potentially worsening congestion. According to Department for Transport forecasts, highly automated driving could bring a 24% rise in road miles by 2050, with significant effects on congestion and road speeds.

The report also highlights an economic quirk of driverless vehicles: nearly half of the mileage covered by Waymo's robotaxis in California occurs with no passenger on board. Without a driver to pay, the costs of running an empty vehicle are minimal, and driving around is potentially cheaper than parking. This dynamic could encourage more vehicles on the road, compounding congestion problems.

What Would an Autonomous Vehicle Tax Look Like?

The thinktank proposes introducing charges on self-driving vehicles now, before they become commonplace. The reasoning is straightforward: it's easier to implement a tax before a large constituency of autonomous vehicle owners exists to resist it. The report notes that fuel duty, introduced in 1909 before mass car adoption, succeeded precisely because it was established early. Once car ownership became widespread, raising fuel taxes became politically difficult.

The proposed tax would serve multiple purposes. First, it could ease the economic transition for displaced taxi drivers. Second, it would provide a future revenue stream to replace dwindling fuel duty, which currently brings in about £27 billion annually and is projected to disappear as the transition to electric vehicles accelerates. Third, it could help offset the social costs of increased congestion.

The thinktank calculates that by 2050, an autonomous vehicle charge set to match the social cost of congestion, approximately 88 pence per mile, would raise £47 billion per year. This projection has implications for government finances even before 2050. As one report author explained, the prospect of future tax revenue affects bond markets and fiscal planning today.

How Are Autonomous Vehicle Companies Responding?

The proposal has sparked sharp disagreement from the companies developing autonomous vehicles. Wayve, a British tech firm pioneering autonomous cars, argued that a sector-specific tax at this early stage would undermine the government's growth agenda. The company emphasized that autonomous vehicles represent a major growth opportunity for the UK, an industry in which Britain holds a genuine competitive advantage.

"A sector-specific tax at this early stage would undermine the government's growth agenda and send precisely the wrong signal: that the UK will penalise its most promising innovators, rather than give them the conditions to scale and succeed," stated Sarah Gates, VP global affairs and assurance at Wayve.

Sarah Gates, VP Global Affairs and Assurance at Wayve

Wayve points to the broader economic opportunity at stake. The autonomous vehicle industry is projected to be worth £700 billion globally, and the company argues that taxing autonomous vehicles would cost the UK high-value jobs and corporation tax revenues from a share of that market. The company's position reflects a common concern among tech innovators: that early regulation or taxation could drive development and investment to other countries with more favorable conditions.

What Do Labor Unions and Government Say?

The GMB union, which represents taxi and private hire drivers, takes a middle position. The union acknowledges that an autonomous vehicle charge could help mitigate economic disruption, but argues it does not go far enough. The union has asked the government, Transport for London, and operators for a comprehensive plan to reskill and redeploy drivers, but says these questions have gone unanswered so far.

"Driverless cars threaten the livelihoods of private hire drivers and the businesses that depend on them. GMB has asked the government, TfL, and operators for a plan to reskill and redeploy drivers, but to date our questions have gone unanswered," remarked Simon Rush, president of the GMB London region drivers branch.

Simon Rush, President of the GMB London Region Drivers Branch

The UK government, by contrast, has backed the introduction of autonomous vehicles as a "transformative opportunity." Ministers have heralded the start 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".

Steps Policymakers Could Take to Address Robotaxi Concerns

• Implement Early Taxation: Introduce charges on autonomous vehicles before they become widespread, establishing a revenue stream to offset job losses and congestion costs while political resistance is still minimal.
• Develop Workforce Transition Programs: Create reskilling and redeployment initiatives for the 417,000 taxi and private hire drivers in England who may be displaced by autonomous vehicle adoption.
• Regulate Empty-Vehicle Mileage: Consider policies that discourage robotaxis from driving without passengers, such as higher charges for empty miles, to help manage projected increases in road congestion.
• Balance Innovation and Protection: Design regulatory frameworks that support autonomous vehicle development while protecting workers and managing urban transportation impacts, rather than choosing between growth and worker welfare.

The debate reflects a broader tension in the autonomous vehicle industry. Companies like Waymo, Uber, and Wayve are expanding services globally, but their growth raises legitimate questions about employment, congestion, and how societies should manage technological disruption. The UK's early decision to allow robotaxi trials puts it at the forefront of this policy challenge, with other countries likely watching how Britain balances innovation incentives against worker protection and urban livability.