ROAD FUND - RIP OFF TAXATION

  Affordable motoring and unfair taxation policies in the United Kingdom

If you introduce a tax for a specific purposes, then it should remain for that purpose and only for that purpose. These are the general principles of good government.

A tax that provides a service for one person at one rate, and another at a preferential rate is discriminatory in principle. For example, if you are paying for a road that only one person uses, and it is not yourself, you might ask why you should be asked to contribute to its upkeep?

The same principle applies where parcel delivery vans use the road a lot, but only pay the same duty as a large car owner who only uses the road once a week. 

The poor are paying to keep the rich, rich. Or, looking at it another way, those who don't use the roads very much and probably cannot afford unfair living costs, are being asked to pay the same as those who use the roads constantly and profit from that use.

Patrick Allen McLoughlin (born 30 November 1957) is a British politician and Member of Parliament (MP) since 1986, initially for West Derbyshire and since 2010 for its successor, the Derbyshire Dales constituency. On 4 September 2012 he was appointed Secretary of State for Transport. A former miner, he is one of the few Conservative MPs to have been a manual worker before entering Parliament.

Patrick is the Conservative MP for Derbyshire Dales.Before becoming an MP in 1986, Patrick sat on Staffordshire County Council from 1981 to 1987 and Cannock Chase District Council between 1980 and 1987. He has held a number of positions in government, including Parliamentary Under Secretary of State at the Department of Trade and Industry and Government Whip. In opposition, he served as Chief Whip from 2005 to 2010. He was appointed to the Privy Council in 2005.

HISTORY OF OUR ROAD TAX

Following the 1888 budget, two new vehicle duties were introduced - the locomotive duty and the trade cart duty (a general wheel-tax also announced in the same budget was abandoned). The locomotive duty was levied at £5 (£485.97 as of 2014), for each locomotive used on the public roads and the trade cart duty was introduced for all trade vehicles (including those which were mechanically powered) not subject to the existing carriage duty, with the exception of those used in agriculture and those weighing less than 10 cwt-imperial, at the rate of 5s. (£0.25) per wheel.

In the budget of 1909, the then Chancellor of the Exchequer, David Lloyd George announced that the roads system would be self-financing, and so from 1910 the proceeds of road vehicle excise duties were dedicated to fund the building and maintenance of the road system.

The Roads Act 1920 required councils to 'register all new vehicles and to allocate a separate number to each vehicle' and 'make provision for the collection and application of the excise duties on mechanically propelled vehicles and on carriages'. The Finance Act 1920 introduced a 'Duty on licences for mechanically propelled vehicles' which was to be hypothecated and paid into a newly established Road Fund. Excise duties specifically for mechanically propelled vehicles were first imposed in 1921, along with the requirement to display a vehicle licence (tax disc) on the vehicle.

The accumulated Road Fund was never fully spent on roads (most of it was spent on resurfacing, not the building of new roads), and became notorious for being used for other government purposes, a practice introduced by Winston Churchill, when he was Chancellor of the Exchequer. In 1926, by which time the direct use of taxes collected from motorists to fund the road network was already opposed by many in government, the Chancellor Winston Churchill is reported to have said in a memo: "Entertainments may be taxed; public houses may be taxed...and the yield devoted to the general revenue. But motorists are to be privileged for all time to have the tax on motors devoted to roads? This is an outrage upon...common sense." 

Of course Winston was one of the privileged class, thus it would not cross his mind for a moment that transport might no longer be a luxury item, but an essential part of modern living. This demonstrates what most politicians are guilty of; a lack of vision for the future.

Hypothecation came to an end in 1937 under the 1936 Finance Act, and the proceeds of the vehicle road taxes were paid directly into the Exchequer. The Road Fund itself, then funded by government grants, wasn't abolished until 1955.

Since 1998, keepers of registered vehicles which had been licensed since 1998, but which were not currently using the public roads, have been required to submit an annual Statutory Off-Road Notification (SORN). Failure to submit a SORN is punishable in the same manner as failure to pay duty and display a tax disc when using the vehicle on public roads. It was announced in the 2013 Budget that SORN declarations would become perpetual, thus removing the need for annual renewal after the initial declaration has been made.

In June 1999, a reduced VED band was introduced for cars with an engine capacity up to 1100cc. The cost of 12 months tax for cars up to 1100cc was £100, and for those above 1100cc was £155.

In the pre-budget report of 27 November 2001 the Government announced that VED for HGVs could be replaced, by a new tax based on distance travelled, the Lorry Road-User Charge (LRUC). At the same time, the rate of fuel duty would be cut for such vehicles. As at the start of 2007 this scheme is still at a proposal stage and no indicated start date has been given. The primary aim of the proposed change was that HGVs from the UK and the continent would pay exactly the same to use British roads (removing the ability of foreign vehicles to pay no UK tax). However, it was also expected that the tax would be used to influence routes taken (charging lower rates to use motorways), reduce congestion (by varying the charge with time of day), and encourage low emission vehicles.

In tax year 2002–2003, it is estimated that evasion of the tax equated to a loss to the Exchequer of £206 million. In an attempt to reduce this, from 2004 an automatic £80 penalty (halved if paid within 28 days) is issued by the DVLA computer for failure to pay the tax within one month of the expiry of the previous tax disc. A maximum fine of £1,000 applies for failure to pay the tax, though in practice fines are normally much lower.

In March 2005, a graduated vehicle excise duty system, with tax bands based on CO2 ratings, was introduced as an incentive to purchase vehicles with lower emission ratings.

In June 2005 the government announced plans to adopt a road user charging scheme for all road vehicles, which would work by tracing the movement of vehicles using a telematics system. The idea raised objections on civil and human rights grounds that it would amount to mass surveillance. An online petition protesting this was started and reached over 1.8 million signatures by the closing date of 20 February 2007.

Since 1 September 2008, the DVLA have stated: "If you pay your vehicle tax by phone or online before the current disc runs out, then you can legally drive or keep your vehicle on the road whilst displaying the tax disc that has run out, for up to 5 working days (Giving time for your new tax disc to arrive by first class post)."

In April 2009 there was a reclassification to the CO2 rating based bandings with the highest set at £455 per year and the lowest at £0, the bandings have also been backdated to cover vehicles registered on or after 1 March 2001, meaning that vehicles with the highest emissions registered after this date pay the most. Vehicles registered before 1 March 2001 will still continued to be charged according to engine size, above or below 1549cc.

In 2009 a consultation document from the Scottish Government raised the possibility of a VED on all road users including cyclists, but there was a strong consensus against this.

From 2010 a new first year rate is to be introduced - dubbed a showroom tax. This new tax was announced in the 2008 budget, and the level of tax payable will be based on the vehicle excise duty band, ranging from £0 for vehicles in the lower bands, up to £950 for vehicles in the highest band.

So how about it Patrick. Any chance of reviewing the regulations in terms of affordability? We doubt it. It would be political suicide to support an idea that deprives the treasury of income and works for the common man!

VEHICLE EXCISE DUTY

Vehicle Excise Duty (VED) (also known as vehicle tax, car tax and road tax), is a tax that is levied as an excise duty and which must be paid for most types of vehicle which are to be used (or parked) on the public roads in the United Kingdom. Vehicles used on public roads should display a current vehicle licence (tax disc) as proof of payment which will not be issued without prior proof that the vehicle has a valid MOT and valid insurance (unless the vehicle is less than three years old, in which case an MOT certificate is not required). A Statutory Off Road Notification (SORN) must be made for a registered vehicle that is not being used on the road, and which has been taxed since 31 January 1998. VED, which is collected and enforced by the Driver and Vehicle Licensing Agency (DVLA), raised GB£5.63 billion in 2009.

Vehicle tax was introduced in the 1888 budget and the current system of excise duty applying specifically to motor vehicles was introduced in 1920. This excise duty was ring-fenced (earmarked) for road construction and was paid directly into a special Road Fund from 1920 until 1937 after which it was treated as general taxation. Even during this period the majority of the cost of road building and improvement came from general and local taxation due to the tax being too low for the upkeep of the roads.

CURRENT REGULATIONS

Most motor vehicles used or kept on the public road are required to display a non-transferable vehicle licence ("tax disc"). The licence is issued upon payment of the appropriate VED amount (which may be zero). Owners of registered vehicles which have been licensed since 31 January 1998 and who do not now wish to use or store a vehicle on the highway are not required to pay VED, but are required to submit an annual Statutory Off-Road Notification (SORN). Failure to submit a SORN is punishable in the same manner as failure to pay duty and display a tax disc when using the vehicle on public roads.

If you have paid for vehicle tax by phone or online before the current disc runs out, then you can legally drive or keep your vehicle on the road whilst displaying the tax disc that has run out, for up to 5 working days (giving time for your new tax disc to arrive by first class post).

As from 1 October 2014, there is no requirement to display the paper Tax Disc, since the records will become fully computerised and logged via the vehicle registration.

RATES

Charges as applicable from 1 April 2013. For cars registered before 1 March 2001 the excise duty is based on engine size (£140 for vehicles with a capacity of less than 1549cc, £225 for vehicles with larger engines). For vehicles registered on or after 1 March 2001 charges are based on theoretical CO₂ emission rates per kilometre. 

The price structure was revised from 1 April 2013 to add an extra charge for the first year (the standard cost was not changed, and remains the same as for 2001 onwards). The 'first year rate' only applies in the year the vehicle was first registered and is said by the government to be designed to send "a stronger signal to the buyer about the environmental implications of their car purchase". Charges as applicable from 1 April 2013 are:

HEAVY GOODS VEHICLES

Taxation for use of Heavy goods vehicles (Large goods vehicles) on UK roads are based on the size, weight per axle. For full details refer to the source reference:

EXEMPT VEHICLES

Various classes and uses of vehicle are provided with a tax disc without charge. These include: electrically propelled vehicles, vehicles older than 40 years (see below), trams, vehicles which cannot convey people, police vehicles, fire engines, ambulances and health service vehicles, mine rescue vehicles, lifeboat vehicles, certain road construction and maintenance vehicles, vehicles for disabled people, certain agricultural and land maintenance vehicles, road gritters and snow ploughs, vehicles undergoing statutory tests, vehicles imported by members of foreign armed forces, and crown vehicles. 

It should be noted that although police vehicles are in fact crown vehicles and therefore exempt from the requirement for a tax disc, they generally display them regardless to suppress complaints from members of the public who might be stopped for failure to display a valid tax disc on their own vehicle, and thus make accusations of double-standards - and on that we agree entirely.

Each year on 1 April, vehicles constructed more than 40 years before the start of that year become eligible for a free vehicle licence under "historic vehicle" legislation. This is due to the age of the vehicle and a presumption of limited mileage. Initially this was a rolling exemption applied to any vehicles over 25 years old, however in 1997 the cutoff date was frozen at 1 January 1973. The change to "pre-1973" was unpopular in the classic motoring community, and a number of classic car clubs campaigned for a change back to the previous system. In 2006 there were 307,407 vehicles in this category:

As of 1 April 2014, vehicles manufactured before 1 January 1974 became exempt from the VED (Finance Bill 2014, as set out in the 2013 Budget, 20 March 2013).

In the 2014 Budget, the government introduced a 40-year rolling exemption, with vehicles built before 1 January 1975 becoming exempt on 1 April 2015 and so on

LINKS

Sorn-statutory-off-road-notification

Make a sorn

UK Government DVLA driver and vehicle licensing agency

Money Matters to me TAX Road Fund Licence

Parkers road tax guide

The AA motoring_advice car buyers guide to road tax

Wikipedia Vehicle_excise_duty

Wikipedia Road_Fund

UK Government vehicle registration certificate V5C log book

Wikipedia Patrick_McLoughlin

UK government Patrick Mcloughlin

Road Transport Research Laboratory

https://www.gov.uk/government/people/patrick-mcloughlin

http://en.wikipedia.org/wiki/Patrick_McLoughlin

https://www.gov.uk/government/ministers/secretary-of-state-for-transport

https://www.gov.uk/vehicle-registration-certificate-v5c-log-book

http://en.wikipedia.org/wiki/Vehicle_excise_duty

http://en.wikipedia.org/wiki/Road_Fund

https://www.gov.uk/sorn-statutory-off-road-notification

https://www.gov.uk/make-a-sorn

https://www.gov.uk/government/organisations/driver-and-vehicle-licensing-agency

http://www.moneymatterstome.co.uk/3-Where-money-goes/Sub1/TAX-RoadFundLicence.htm

http://www.parkers.co.uk/cars/advice/road-tax-guide/

http://www.theaa.com/motoring_advice/car-buyers-guide/cbg_roadtax.html

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