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

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.

Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.

35 comments

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Carlton Reid [128 posts] 3 years ago
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As it's highly likely most drivers will pay even more motoring taxes than previously (Government's are good at doing this sort of thing) the 'we pay for roads' syndrome will get worse. And should road pricing be introduced expect such problems to sky rocket.

VED reformers and road pricing wonks are not always to be trusted to have cyclist welfare as a priority:

http://ipayroadtax.com/no-such-thing-as-road-tax/this-clever-economist-t...

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Sadly Biggins [269 posts] 3 years ago
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Governments are pretty good at finding the law of unintended consequences. What happens if this comes in and the sales of cars with high first registration charges tank (no pun intended)? I imagine the government will trumpet its success in reducing emissions and then change the rules again pretty smartish....

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Collett73 [14 posts] 3 years ago
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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!

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AleT [53 posts] 3 years ago
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What rubbish. If you want to tax cars based on emissions, just put up fuel duty.

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Simon_MacMichael [2448 posts] 3 years ago
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Good points - although you have to wonder whether there's a cat in hell's chance of the current government introducing a tax that would hit the wealthiest hardest  39

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Sadly Biggins [269 posts] 3 years ago
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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.

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Angelfishsolo [132 posts] 3 years ago
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What about the 2nd hand market?

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mikeprytherch [223 posts] 3 years ago
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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.

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therevokid [932 posts] 3 years ago
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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" ???  4

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antonio [1119 posts] 3 years ago
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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.

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drheaton [3318 posts] 3 years ago
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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.

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step-hent [720 posts] 3 years ago
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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.

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OldRidgeback [2590 posts] 3 years ago
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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.

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Mr Will [91 posts] 3 years ago
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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.

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GZA [3 posts] 3 years ago
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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.

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Campag_10 [153 posts] 3 years ago
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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.

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Campag_10 [153 posts] 3 years ago
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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.

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SevenHills [196 posts] 3 years ago
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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!

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Lacticlegs [124 posts] 3 years ago
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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.

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OldRidgeback [2590 posts] 3 years ago
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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.

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sparrow_h [35 posts] 3 years ago
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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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Mr Will [91 posts] 3 years ago
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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.

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handlebarcam [564 posts] 3 years ago
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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.)

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ragtag [207 posts] 3 years ago
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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.

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AWPeleton [3277 posts] 3 years ago
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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 ??????

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ragtag [207 posts] 3 years ago
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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.

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giff77 [1232 posts] 3 years ago
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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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OldRidgeback [2590 posts] 3 years ago
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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.

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bikecellar [268 posts] 3 years ago
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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

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GZA [3 posts] 3 years ago
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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.

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