"Road tax" jibes to be consigned to past? Think tank recommends scrapping Vehicle Excise Duty

CentreForum proposes replacing existing annual taxation regime with one-off "first registration" charge

by Simon_MacMichael   October 4, 2012  

Car wheel at speed copyright Simon MacMichael.jpg

Could “pay your road tax!” jibes directed at cyclists become a thing of the past? A think tank is proposing that instead of motorists paying annual Vehicle Excise Duty (VED), a large, one-off "first registration" tax should instead be imposed on the purchase of large-engined vehicles such as sports cars and 4x4s.

Under the proposals devised by Tim Leunig, chief economist at he independent liberal think tank Centre Forum, a supercar such as the Aston Martin one-77 could attract a “first registration” tax of £23,050 based on emissions.

The mooted tax would see purchasers of new cars charged £50 for each gram of carbon dioxide the vehicle produces over a set threshold, suggested as being 94g/km. Purchasers of some less polluting vehicles could benefit from a government subsidy of up to £750 under the proposals, which have the backing of the Liberal Democrats.

In his report, Cutting emissions and making cars cheaper to run: a new approach to vehicle excise duty, Dr Leunig provides examples of how the proposals might operate on various models of Ford Fiesta.

The cost of a 1.25 litre model would go up from £9,084 to £10,734, but for the 1.6 litre diesel model, the price would fall from £11,845 to £11,495.

"More efficient cars save motorists money and reduce global warming. What's not to like?" said Dr Leunig, who wrote the report prior to his recent appointment as policy adviser to the Secretary of State for Education, Michael Gove.

Ed Davey, Secretary of State for Energy and Climate Change, commented: “I welcome this report. It is exactly the sort of innovative thinking we have come to expect from CentreForum.”

Vehicle Excise Duty – often erroneously referred to as “road tax,” something that hasn’t existed since the 1930s – raises nearly £6 billion annually, but the amount raised is forecast to fall in the years ahead as motorists choose more fuel-efficient models, leading civil servants to consider alternative ways of raising motoring-related taxes.

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I'm just glad that in the unlikely event this comes in it won't be a problem for me because: (a) I don't drive a gas guzzler; and (b) my Euromillions numbers came up last Friday*

* OK, I won £2.90. Bring on retirement.

posted by Sadly Biggins [264 posts]
4th October 2012 - 10:38

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What about the 2nd hand market?

Angelfishsolo's picture

posted by Angelfishsolo [104 posts]
4th October 2012 - 10:39

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This will never come in, it will kill new car sales, why should I purchase a new car, effectively paying for its life, even though after 5 years somebody has it.

Why oh why do we have these reports... just put it on fuel, how hard is this ! this way, the people who use the roads the most... pay the most, why do we continue to overlook the fairest and most obvious way of doing this.

posted by mikeprytherch [211 posts]
4th October 2012 - 10:52

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Simon_MacMichael wrote:
... hell's chance of the current government introducing a tax that would hit the wealthiest hardest ...

Shouldn't that be "Any Government" ??? Big Grin

still on the 3rd switch-back of Bwlch !

posted by therevokid [682 posts]
4th October 2012 - 10:53

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No one seems to realise the extent of the company car side of things, tax relief on purchase and written off at the end of three years or so. Plus the expenses for running, tax relief, VAT registered companies claim back the vat on petrol, diesel, repairs etc. There's a huge amount of money to consider.

antonio

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posted by antonio [937 posts]
4th October 2012 - 11:12

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Angelfishsolo wrote:
What about the 2nd hand market?

This would just inflate all prices in proportion, part of the additional cost of buying a car from new would be passed on to the next owner and the next and so on so that at best we'd be paying exactly the same except instead of paying VED over time we'd be paying it front loaded when we bought a car from new or 2nd hand.

It wouldn't vastly increase 2nd hand sales because everything would just be more expensive.

mikeprytherch wrote:
This will never come in, it will kill new car sales, why should I purchase a new car, effectively paying for its life, even though after 5 years somebody has it.

Why oh why do we have these reports... just put it on fuel, how hard is this ! this way, the people who use the roads the most... pay the most, why do we continue to overlook the fairest and most obvious way of doing this.

See above, you'd be paying up front for the life of the car but would have reduced costs going forwards (ie no more VED each year) and you'd be able to pass off part of the additional cost onto the next owner. That's how it'd work, you wouldn't just be hit for buying the car from new with no way of making some of the cost back.

Likewise, if the cost of less efficient cars goes up considerably more than the little fuel efficient cars it's

a) a progressive tax hitting the wealthiest hardest (as they're the ones buying Land Rovers, Audi's and Aston's) and

b) actually prompting people to consider buying a more fuel efficient car as they'll see it as being cheaper up front and not just over time. It's easier to justify paying an extra £50-£100 a year but if you get hit with £2000 more upfront you'll think again.

Physcologically it's a great idea as there would be a much larger price differential reflecting fuel efficiency and therefore a 'fuel efficient' car becomes cheaper upfront and over time (moreso than they are already).

I think it's not such a bad idea to be honest. The tax on fuel is a separate issue as the Govt. already has two taxes, the VED and fuel duty. Merging them has unintended consequences on haulage and other industries which use large amounts of fuel.

The only real downside to the VED or any direct replacement is that it hits all car owners equally no matter how many miles you do but I guess that's where fuel duty comes in.

posted by drheaton [3429 posts]
4th October 2012 - 11:21

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Collett73 wrote:
So, the price of new cars goes through the roof. Is that really the answer?
Surely, that's just going to make people buy their 4x4s from parallel importers?
If they really want to hit the gas guzzlers, why not just charge more tax on the gas? Oh wait, they already do!

But if a car is bought from another importer and then registered here, the charge would apply on that registration, I think. So the only way to avoid it would be to maintain a foreign registration - which I think makes insurance a bit more difficult/expensive.

posted by step-hent [653 posts]
4th October 2012 - 11:41

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I think this will be dropped. But road user charging is coming for vehicle drivers. It is inevitable. Get used to the idea now.

The UK road system has been underfunded for years and vehicle drivers will have to pay for widening, new roads, improvements and upgrades. The UK Government doesn't have the funds to pay for all this. Higher fuel duty is not an option as cars are becoming more economical and because electric vehicles and other new power sources will increase in use in coming years.

Road tolling would only cover the UK's motorway network. The A roads and B roads need funding too, as the French have now revealed with the huge (and costly) backlog of works required to improve the N Routes.

Road user charging is the only answer. And you can imagine the howls of protest when this becomes clear.

OldRidgeback

posted by OldRidgeback [2132 posts]
4th October 2012 - 12:15

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I think road charging is a long way off - It would be political suicide for whoever introduced it. I think as cyclists we should be opposing it too. The roads are for everyone, not just cars and road charging runs contrary to this.

posted by Mr Will [88 posts]
4th October 2012 - 12:26

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I think we should pay 'road tax'. It would end the argument forever and give us an equal say - worth it IMO.

posted by GZA [3 posts]
4th October 2012 - 12:51

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There's a flaw in the argument that favours diesel cars on cost grounds. As they age, replacement injectors and diesel particulate filters are costly repairs.

Some motoring pundits now recommend petrol engined cars for all except very high mileage motorists, because of the greater reliability.

posted by Campag_10 [153 posts]
4th October 2012 - 13:47

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There are strong reasons for government wanting to discourage car use in favour of more walking, cycling and use of public transport. Owning a car is a very inefficient and expensive way of tying up capital for most people. The improvements in public health from more walking and cycling would free up a huge proportion of the NHS budget.

It's impossible to lower public transport fares and there is a line of thinking that says that car travel is too cheap. Some form of road pricing would influence behaviour as the congestion charge has in London. The stumbling block is that it would be electoral suicide.

posted by Campag_10 [153 posts]
4th October 2012 - 13:52

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GZA wrote:
I think we should pay 'road tax'. It would end the argument forever and give us an equal say - worth it IMO.

I already pay VED as i own a car as well as a bike. I am not willing to have to pay twice!

posted by SevenHills [144 posts]
4th October 2012 - 14:05

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GZA wrote:
I think we should pay 'road tax'. It would end the argument forever and give us an equal say - worth it IMO.

Wish that were true. Don't think it would though - if the 'road tax' argument were lost to them the cycle-haters would have no trouble in switching to whatever other spurious justification to spit bile at us.

Besides - I own a car (as do most cyclists I know) already. I pay road/car tax and I do have an equal say..even if the motoring lobby don't like listening to it.

posted by Lacticlegs [124 posts]
4th October 2012 - 14:10

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Mr Will wrote:
I think road charging is a long way off - It would be political suicide for whoever introduced it. I think as cyclists we should be opposing it too. The roads are for everyone, not just cars and road charging runs contrary to this.

Well if you can think of another way of funding the road repairs and development needed, please suggest it. But increases in fuel duty won't work, nor will tolling highways, for the reasons I've explained. The thing is that high mileage drivers of large vehicles are subsidised by low mileage drivers. And city drivers are subsidised by country dwellers. Politically it's a hot potato but, like the pensions issue that was first raised no less than 30 years ago, it won't go away.

Looking ahead, road user charging (with sliding scales to account for peak periods, urban driving and vehicle size) is the only answer. It's well known in the road sector, and it's equally well understood how unpopular this will be.

OldRidgeback

posted by OldRidgeback [2132 posts]
4th October 2012 - 14:17

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In terms of paying road tax, we pay just as much as drivers of any other zero-emission vehicles, seems fair to me.

Paying the big hit up front would only encourage people to hang onto their older cars for longer, and if they don't retrospectively charge older cars when it comes in, encouraging people to stick with older more polluting cars for longer.

It may help people buying a new car already to choose a more efficient one, but it won't encourage people to drive any less, so will not help in any meaningful way in reducing the amount of carbon or air pollution emitted, or problems with road capacity.

But then the goal here seems to be to make cars cheaper to run, which can only be a backward step in addressing the problems caused by mass and indiscriminate use of motor vehicles (emissions, pollution, inactivity, injury, traffic congestion, ...).

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posted by sparrow_h [35 posts]
4th October 2012 - 14:31

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The more I think about it, the more I see your point. I think it's likely still a long way off, and will depend significantly on how technology develops along the way. If biofuels or hydrogen win out over electricity then the status quo could likely remain with little more than tweaks.

posted by Mr Will [88 posts]
4th October 2012 - 15:08

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Motorists will stop thinking of cyclists as scrounging freeloaders the day hell freezes over (or possibly a little sooner, say when the Thames Barrier is breached.)

posted by handlebarcam [527 posts]
4th October 2012 - 17:01

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We have road charging already in London. They also have it in Stockholm, I only know this because my employer set it up. Anyway.. what are all those coppers going to do if they aren't taking photos of cars by the roadside and checking they have paid VED? VED is also a good way to ensure people have insurance. When I say good, it's better than nothing.

Once all cars are on to zero VED charge they would then move the goal posts as they have always done. Chances are it will be towards alternative fuel.

jaunty angle: bikes and communications
http://ragtag.wordpress.com

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posted by ragtag [154 posts]
4th October 2012 - 17:38

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ragtag wrote:
We have road charging already in London. They also have it in Stockholm, I only know this because my employer set it up. Anyway.. what are all those coppers going to do if they aren't taking photos of cars by the roadside and checking they have paid VED? VED is also a good way to ensure people have insurance. When I say good, it's better than nothing.

Once all cars are on to zero VED charge they would then move the goal posts as they have always done. Chances are it will be towards alternative fuel.

I think you will find they are traffic wardens employed by councils. Also if someone cant be arsed to pay £300+ for car insurance do you honestly believe that they will be bothered about getting an excise licence ??????

If you must break the law, do it to seize power: in all other cases observe it. Gaius Julius Caesar.

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posted by stumps [2676 posts]
4th October 2012 - 17:53

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No, they are Police vans taking photos of cars reg and matching them against the DVLA database - if they are on the road and you have sent in a V890 (SORN) then they stop you. If no VED has been paid then both the Police and traffic wardens inform the DVLA who follow up with you directly. Traffic wardens can't issue fines for VED.

Indeed - people that have no VED often have no insurance, but it makes the vast majority of people get both. That was the point.

jaunty angle: bikes and communications
http://ragtag.wordpress.com

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posted by ragtag [154 posts]
4th October 2012 - 18:04

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GZA wrote:
I think we should pay 'road tax'. It would end the argument forever and give us an equal say - worth it IMO.

I already pay for the roads through council, income, vat, and all other taxes/duty that the govt cares to throw at me. I do not own a car yet my taxes contribute to the costs of motorways and certain A roads which I am not allowed to cycle on. My bikes do not rip up the road surface or damage road furniture yet I have to endure shitty surfaces created by lorries and cars. The reason why there is no tax dedicated to roads is to prevent the small minded argument of "I own a car and pay tax therefore I own the road"

The only way forward is to scrap VED and increase fuel duty to create an even playing field. Then, no matter how much you use your polluter, you compensate for the damage caused by your emissions.

I do hope you were basing your comment on the fact that you would be paying nothing for owning a zero emission vehicle.

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posted by giff77 [1040 posts]
4th October 2012 - 19:05

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ragtag wrote:
We have road charging already in London. They also have it in Stockholm, I only know this because my employer set it up. Anyway.. what are all those coppers going to do if they aren't taking photos of cars by the roadside and checking they have paid VED? VED is also a good way to ensure people have insurance. When I say good, it's better than nothing.

Once all cars are on to zero VED charge they would then move the goal posts as they have always done. Chances are it will be towards alternative fuel.

There's road user charging in other cities too. But it's only a temporary fix. Full road user charging with sliding scales depending on time of road use, whether the road is in a congested area and how large the vehicle is, will be the only answer. Technologically it's possible now. But it'll be too costly with present technology. In 10 years time that will change. Forget biofuels as they're environmentally unfriendly and uneconomic and always will be, sorry.

OldRidgeback

posted by OldRidgeback [2132 posts]
4th October 2012 - 19:53

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giff77 wrote:
GZA wrote:
I think we should pay 'road tax'. It would end the argument forever and give us an equal say - worth it IMO.

I already pay for the roads through council, income, vat, and all other taxes/duty that the govt cares to throw at me. I do not own a car yet my taxes contribute to the costs of motorways and certain A roads which I am not allowed to cycle on. My bikes do not rip up the road surface or damage road furniture yet I have to endure shitty surfaces created by lorries and cars. The reason why there is no tax dedicated to roads is to prevent the small minded argument of "I own a car and pay tax therefore I own the road"

The only way forward is to scrap VED and increase fuel duty to create an even playing field. Then, no matter how much you use your polluter, you compensate for the damage caused by your emissions.

I do hope you were basing your comment on the fact that you would be paying nothing for owning a zero emission vehicle.


+1

onward ever onward

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posted by bikecellar [224 posts]
4th October 2012 - 20:01

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You do not own a car (fair play by the way), well there you go, you do not have a balanced viewpoint. I understand what you are saying but you are missing the point - the vast majority of motorists will never accept us until we do contribute, and that will be a price worth paying to achieve IMO.

posted by GZA [3 posts]
5th October 2012 - 8:48

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GZA wrote:
You do not own a car (fair play by the way), well there you go, you do not have a balanced viewpoint. I understand what you are saying but you are missing the point - the vast majority of motorists will never accept us until we do contribute, and that will be a price worth paying to achieve IMO.

Yes, but we do contribute, that's the point! Statistically cyclists are more affluent than non-cyclists so per person cyclists are paying more towards road infrastructure than the average population.

I pay income and council tax which pays for the roads and other systems. I already pay, I don't see why I need to pay twice just for motorists to find some other reason to hate me.

I also have a car and pay VED, I have no issue paying that because when I drive it I pollute. I don't pollute when I cycle so why should I pay more?

posted by drheaton [3429 posts]
5th October 2012 - 9:00

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drheaton wrote:
GZA wrote:
You do not own a car (fair play by the way), well there you go, you do not have a balanced viewpoint. I understand what you are saying but you are missing the point - the vast majority of motorists will never accept us until we do contribute, and that will be a price worth paying to achieve IMO.

Yes, but we do contribute, that's the point! Statistically cyclists are more affluent than non-cyclists so per person cyclists are paying more towards road infrastructure than the average population.

I pay income and council tax which pays for the roads and other systems. I already pay, I don't see why I need to pay twice just for motorists to find some other reason to hate me.

I also have a car and pay VED, I have no issue paying that because when I drive it I pollute. I don't pollute when I cycle so why should I pay more?

Read my posts please. Increasing fuel taxation is a very short term approach to generating funding for road construction. Road user charging is inevitable for motor vehicle owners. Those in the road sector are also aware that cycling reduces congestion and wear an tear on the network is therefore to be encouraged, so that cyclists will not be charged. Those who call for cyclists to pay to use the roads do not understand all the factors with regard to road use and funding.

OldRidgeback

posted by OldRidgeback [2132 posts]
5th October 2012 - 9:16

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GZA wrote:
You do not own a car (fair play by the way), well there you go, you do not have a balanced viewpoint. I understand what you are saying but you are missing the point - the vast majority of motorists will never accept us until we do contribute, and that will be a price worth paying to achieve IMO.

Sorry, but I do have a balanced viewpoint. I have held a licence for over 25 years. I have also owned numerous cars and driven all kinds of vehicles. In one of my previous jobs one of my responsibilities was to ensure that the fleet of artics and flatbeds had the correct duty paid.

I say again, all the taxes and duty I pay contribute to the upkeep of the road infrastructure. The VED is a tax on your vehicle's emmissions it goes into the pot and IS NOT ringfenced for road maintenance. Car ownership has become a right in the UK rather than a privilage or a need and with it the misperception that the motorist 'owns' the road. We cannot reinforce this misperception that VED is the motorist paying their way. It is the consequence of owning a piece of polluting machinery. We can also not afford to go down the way of 'road pricing'

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posted by giff77 [1040 posts]
5th October 2012 - 10:25

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VED should be scrapped as we pay tax on fuel - which itself is a pay as you drive tax. I think an insurance disk should be displayed instead.

posted by jimmyd [92 posts]
6th October 2012 - 17:02

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In the Republic of Ireland you have to display an insurance disc. Meanwhile in N Ireland as well as the VED disc you have to display a MOT disc. I'm sure there are other countries around the world that you are require to display certain 'discs'

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posted by giff77 [1040 posts]
6th October 2012 - 18:39

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