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"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...

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.

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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