Whether it’s on television shows like Top Gear, or on boards outside the Post Office, in the UK ‘road’ tax has become part of the public conscious. The little tax disc that has to be displayed on the windscreen of every motorised vehicle represents the amount that every motorist has to pay for the upkeep and use of the roads.
In so doing the motorist has more right to be on those roads than anyone else as he or she has paid for it directly. If there is a pothole in the road then the motorist has the right to demand why he or she pays their ‘road’ tax; if cycling facilities are provided on the road the motorist has the right to demand why when a cyclist pays no ‘road’ tax; if a bus lane is put in place the motorist has the right to demand whether his or her ‘road’ tax will be reduced because they are allowed to use less of the road.
‘Road’ tax is, therefore, seen as a burden which is levied upon the motorist in order to safeguard the use of the road by motorised vehicles.
The Reality of ‘Vehicle Excise Duty’
Of course ‘road’ tax has not existed since the 30s, when it was abolished by Winston Churchill. What we have in place today is ‘Vehicle Excise Duty’ (or VED), which is probably better described as ‘car/truck/motorbike’ tax. The amount paid is ostensibly linked to harmful emissions from the vehicle, and so heavily polluting vehicles pay a higher rate than smaller, ‘greener’ vehicles (with electric vehicles zero-rated due to there being no emissions).
This tax is not ring-fenced (or hypothecated) to pay for the roads, but instead is part of the general taxation pot of the government. It can’t, therefore, be maintained that payment of this tax gives more right to use the roads than those who do not pay it, as anyone who pays tax of any kind (such as council tax, or even VAT on purchases in shops) contributes to that general pot from which the roads budget is derived.
Complaints that cyclists don’t have ‘road’ tax are particularly odd (and have no accompanying calls for horses used on roads to be required to have ‘road’ tax paid) as even if it was a requirement for them to carry tax discs they would be zero-rated, as with the electric cars. This means that millions of tax discs would have to be produced for bicycles, with no specific income to create the tax discs, so oter taxation would have to be increased to pay for the administrative burden.
Hypothecation of Tax Revenue from Road Users
So how should tax be changed (if indeed it should)? Hypothecation of taxes basically involves turning VED into what the general public think of already as ‘road’ tax. There aren’t many taxes which are ring-fenced in this way, although the television licence is one, and there aren’t too many people who are fans of that particular taxation.
The rate of tax under this system would likely fluctuate year on year depending on how much work was required on the road network. Also, as the road network grows the costs will, naturally, increase, so ‘road’ tax would consequently go up.
It would be equitable in this situation to set the share of ‘road’ tax according to potential burden on the road network of vehicles, and so the larger vehicles would end up paying more as they can cause more damage to a road surface, and take up more space on it.
Again, very small electric vehicles, and bicycles if they were included, would more than likely be zero-rated, or be subject to a token administration charge.
The Fuel Duty Escalator
Another route would be for VED to be scrapped altogether, but to retain hypothecation through taxes already paid on fuel. This actually makes sense from an environmental point of view as well, since those who use the most fuel (either because they drive a lot, or drive vehicles with low mpg) will pay the most, and it may encourage the seeking of other transport options.
It does, however, contain a certain inequitable element where people live in areas that make use of the car over large distances more of a necessity than a luxury (and we can’t expect everyone to move to the cities, that would be frankly ridiculous).
Fuel prices would also likely go much higher than at present, and the cost of fuel is already a bugbear for many, and a source of constant political fighting. And as with the hypothecation suggested above, the amount it would increase by would fluctuate constantly depending on how much work the road network required.
Conclusion on ‘Road’ Tax
The current taxation system for vehicles is far from perfect, but is perhaps the simplest form available. Other ideas may well actually spread the burden for the use of the roads onto the correct people, but it leads to uncertainty of amounts and application.
The choice is a difficult one, but in the meantime, in order to quell more misinformation and misdirected paranoia, it really should be made clear to people more about how the current system operates. And it should begin with an acknowledgment that ‘road’ tax simply does not exist.
More on taxes on Suite 101:
And you can find out more about Vehicle Excise Duty by visiting the DVLA Website.
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