Car tax is amongst the most hotly disputed forms of taxation. Politically, car tax rates are an important topic; no one wants to spend more than they have to, particularly in today's strained financial environment, and there is therefore constant wrangling regarding the correct level of taxation for drivers.
This problem is compounded by the fact that many people rely on their car or other vehicle for their job. One need not think back very far to remember mass protests by hauliers angry about what they saw as punitive tax rates punishing them for doing their job. As can be seen, the question of fairness is a difficult one to answer with regard to any tax, but particularly car tax.
In the first instance, it should be remembered that car tax comes in several forms. Almost every car on the road today is liable for a standard rate of car tax, payable to the DVLA. However, taxes are levied on many other activities and items associated with driving (see our aticles What Does Road Tax Pay For? and Company Car Tax Liability and Rules on this site). The most obvious example of this (and amongst the most frequently argued over) is fuel duty.
Car Tax
The government wants car tax to reflect the fuel efficiency and CO2 emissions of the vehicle in question. So from March 2011, the amount of car tax you pay will depend on the emissions level of your car and the fuel you use. Fair enough, most would say. However, there is some discrepancy here as 'alternative fuel vehicles' (that is, those that do not rely solely on petrol or diesel) automatically qualify for lower tax rates, even if their vehicle has the same emissions level as the equivalent fossil fuel-powered car.
Fuel Duty
Once you have bought and taxed your car, you will also need to pay for fuel. When you buy petrol at the pump, only a very small proportion of the price actually pays for the fuel itself. There is a famous claim that a garage will make more money from a packet of crisps than they will from £5 of fuel, although whether or not this is actually true remains to be seen.
Regardless, you can expect around two thirds of your annual petrol or diesel bill to be attributable to tax. Again, the fairness of this is disputable. Should the government be making driving so expensive?
Parking Fees
Every time you park in a council-owned car park you are essentially paying a tax. You are purchasing a service, in the same way that your council tax pays for rubbish collection and other services. However, it is fairly indisputable that some councils operate their parking schemes in a less than fair manner. Examples include parking machines that do not give change, or which accept coins in inappropriate increments.
Sadly, there is very little we can do about car tax – if you need to drive, you need to pay it. That said, if you feel strongly that car tax is unfair there are several lobbying groups that pressure the government into reducing the rates.
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A one-litre Ford Fiesta petrol Ecoboost at the average 12,000 miles per annum, puts out exactly the same CO2 in 12 months as, for example, a Lexus LS460 running 5,000 miles (perhaps typical mileage for a retired person).
The Ford owner pays £30 p.a., the Lexus owner £570.
If that is fair, I am a banana.
JellyBean - 18-Oct-19 @ 8:25 PM
For someone who can only afford a car for £1000 and the VED will cost them £200 each year, which is 20% of the vehicle cost, this is extremely expensive and unfair. One the other hand the wealthier who can afford a car ie. £40,000, would they be happy to pay 20% of the vehicle cost for VED? (£8000 each year)......
Thank you Goverment/DVLA for making 'The rich get richer and the poor get poorer'
cdoggywoof - 21-Mar-19 @ 9:26 AM
Chris - Your Question:
My car tax is up for renewal on my golf gt tdi 2002.I just want to know why should I pay the same road tax as a friend who has to hammer her car down the motorway for work.I only use mine locally etc.Is that far road tax :( ????
Our Response:
For cars registered before 1 March 2001 the rate of vehicle tax depends on its engine size. The rate for cars registered on or after 1 March 2001 depends on CO2 emissions and fuel type. Car tax is not dependent upon how often you use the roads or the vehicle.
TheTaxGuide - 24-Oct-17 @ 12:35 PM
My car tax is up for renewal on my golf gt tdi 2002 .I just want to know why should I pay the same road tax as a friend who has to hammer her car down the motorway for work .I only use mine locally etc .Is that far road tax :( ????
Chris - 21-Oct-17 @ 3:07 PM
I cannot understand why the government is taking more and more off people and we have nothing to show for it the state of our roads is a prime example shouldn't the government make it public all the money that goes into it be made public as to what happens to it and not bury it under a load of politically correct jargon just plain English pleaseb
Mimi - 27-Mar-17 @ 6:27 PM
Large family therefore large car. In order for tax rate dependent on co2 emission to be rational, it also has to be related to use, ie. Total co2 emitted is co2/ per KM timesnumber of kilometers travelled. Otherwise it's a nonsense. To administer this fair system simply agree a cost per unit value of emission and apply to actual mileage.
Now we have no tax disk to worry about, this fair system can be easily applied over the entire range of vehicles.
Minister - 5-Dec-14 @ 5:18 PM
its all about money nothing to do with being fair. you pay to use the roadthen the likes of newhamcouncil want to turn newham in to a big car park so they can make you pay again they have cameras every where yellow lines red lines bus lanes camera carspermitsall for one thing to take your money the last thing it is - is fair its like dick turpinthehighway robberthey wont be happy till everyonehas topay to park outside thier house or in the street. you pay your road tax that should entitle you park onthe roadbut noit dont I dont know what its for if you donthave the right to useitparking is using it butyoucant perhaps or road tax should go to your local authority so they dont charge you againits a liberty.
donthaveone - 2-Aug-14 @ 9:20 PM
I have recently purchased a new van. The vehicle is 1.6 litre diesel with 6gears and a stop/start system. I paid £215 for 12 months road tax.As the vehicle is a new model , I wondered why the road tax is so high in comparison with the same size car.
Tillys dad - 23-Aug-12 @ 7:11 PM
Car Tax should be based on how much you use the road not on what your emissions are. Every vehicle that "pounds" the roads should share the burden of thier proportion of repairing and maintaining those roads, including the low emission vehicles!!!
What will the government do when the roads are full of low emission vehicles that don't pay road tax???
It is also curious to note that only those people who can afford to pay the extortionate prices for these low emission vehicles(i.e. the rich) are the ones who are exempt from bearing the tax burden.
Karl - 7-Jun-12 @ 2:18 PM
I think most motorists understand that the high prices at the pumps are largely due to the amount the government charges in fuel duty - far more than in, say, America. Whilst we understand the need for taxes it's very much a double-edged sword, especially as duty rises regularly. The government wants people to work, but when the cost of filling up the car keeps rising and rising, the cost of the commute can become prohibitive, and cuts in bus services make public transport impossible.
