The way in which cars and road use are taxed in the UK is a complete mess.*
I can see a lot of merit in Fuel Duty, which is straightforward 'rent for roads' or a very basic but fairly effective kind of road user charge; if you drive during the rush hour (or if you do 80 mph or 90 mph on the motorway), your fuel use per mile is a lot higher than outside peak times (or if you drove more sedately-considerately), so you end up paying more per mile. Fair enough.
VAT on vehicles, servicing and fuel is the worst kind of tax; the VAT on fuel could easily be replaced with a correspondingly higher fuel duty and VAT on new vehicles and repairs can be scrapped anyway.
Then there is the vehicle tax, the most nonsensical tax of all.
Having a number plate and registering the owner's/keeper's address is a legal duty and imposes a burden on the driver (they know where to send speeding tickets and parking fines, they can track down dangerous drivers etc). You might or might not consider those quite reasonable burdens, the price you pay for the privilege of using public roads, but they are a burden nonetheless, so making people pay to register their cars i.e. get a license is topsy turvy logic.
However, there are certain types of car which impose a burden on other road users, namely really self-indulgently wide cars, which slow the traffic down on narrower roads and take up one-and-a-half parking spaces.
So my bright idea of the week is to replace vehicle tax based on age of vehicle, engine size CO2 emissions and all that stuff with an annual Vehicle Width Tax.
The narrowest car on the road is something like a Smart car, which is 61" wide. So our exempt base line is 60", everything narrower than that (including motorbikes and mopeds) pays nothing, and for every inch wider than that (excluding wing mirrors, which are a legal duty, and it is wrong to tax people for complying with the law) costs you, say, £50 a year.
So my VW Golf Mk II, 66" wide, would cost me £300 a year and the widest cars like a new Range Rover, 82" wide, would £1,100 a year. Both of which are, not entirely coincidentally, pretty much the same as their current tax.
It will be interesting to see what happens to new car registrations after that; the VWT might have no effect or people might start buying narrower cars. They might even start buying wider cars to show off how much money they've got, which is the whole reason for buying such a car and having a personalised number plate in the first place.
So depending on how people respond, the exempt limit and the tax rate per inch can then be nudged up or down accordingly.
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* It gets even worse with business car taxation.
There are various overlapping sets of rules for leased cars, capital allowances on owned cars and the benefit in kind charge for company cars. All of these are intended to produce a relatively higher tax bill for cars with higher CO2 emissions - but the higher C02 emissions are already paying extra tax because they use more fuel and hence pay more fuel duty.
So if you have an expensive company car with high emissions, you are paying five times over for the privilege; more VAT on the cost (irrecoverable); more fuel duty per mile driven; a higher car tax; restricted capital allowances/lease deduction and a higher P11D charge.
That, surely, cannot be right. It's difficult to work out how much tax this all raises, but getting rid of it all and increasing the VWT to (say) £60 per inch to be revenue neutral is surely the way forward.
Debate Magazine
