Vehicle Excise Duty: a regressive and illogical tax.

Above, a lovely example of British engineering – the Bentley Mulsanne (click on image for full size rendition).
There were 31,035,791 cars on British roads at the end of 2009. In the second quarter of 2010, according to AutoTrader, the average asking price for a used car in the UK was £9,206 Vehicle Excise Duty raised £5.63 billion in 2009.
Let us do some math:
£5,630,000,000 divided by 31,035,791 works out at £181.40 per car.
This means that many are subsidising others. That of course is alright so long as that subsidising is fair. In the case of a tax such as income tax, rich people paying tax at the top rate of 50% are paying more than the poorer people paying at the lowest rate of 10% That is fair: the people with the broadest shoulders should bear the greatest burden.
However, this is not the case with VED. Cars are assessed on “environmental grounds” Cars such as the near useless Nissan Leaf are free of tax. Others such as the Bentley Mulsanne are much more. However a Bentley Mulsanne is a particular case in point:
The on the road cost of a “basic” Mulsanne is £230,000. The government charge £1,000 for its first registration but from year two the owner pays VED of £460 per annum. Of course this amount represents an insignificant outlay for any person rich enough to be able to part with £230,000 on a single motor car. £460 pa represents a taxation rate of 0.2% calculated on the showroom cost of the vehicle.
Let us now compare a Bentley with a lesser offering from the Volkswagen stable: the humble Skoda Fabia S. This car in “basic” form costs £9765 on the road. Its VED from year two is £95, which is £365 less than the Mulsanne. However, £95 pa represents a taxation rate of 0.97%, nearly five times the rate applied to the Mulsanne.
Let us now look at the average second hand car: At £9,206 and VED at £181.40 pa, this represents a taxation rate of 1.97%
The British Gazette suggests that an equitable system of levying VED should be by the vehicle’s current market valuation. This would mean that people on low incomes running an second hand car worth £1,001 would pay say £10 pa – the taxation rate of 1%. VED on a used car of average value (£9,206) at 1% would be £92.06 pa
VED on a Bentley worth £230,000 at 1% would be £2,300 pa. That is assuming a flat 1% rate across the board. However, why not introduce a scaled rate of VED. Let us say that cars up to £10,000 in value should be taxed at 0.5% which would mean £50 pa on a £10,000 car.
The British Gazette would suggest the following bands:
Up to £1,000 NIL
£1,001 to £10,000 0.5%
£10,001 to £20,000 1%
£20,001 to £30,000 1.5%
£30,001 to £40,000 2.0%
£40,001 to £50,000 2.5%
£50,001 to £60.000 3.0%
£60,001 to £70.000 3.5%
£70,001 to £80.000 4.0%
£80,001 to £90.000 4.5%
£90,001 to £100,000 5.0%
£100,001 to £110,000 5.5%
£110,001 to £120,000 6.0%
£120,001 to £130,000 6.5%
£130,001 to £140,000 7.0%
£140,001 to £150,000 7.5%
£150,001 to £160,000 8.0%
£160,001 to £170,.000 8.5%
£170,001 to £180,000 9.0%
£180,000 to £190,000 9.5%
£190,000 to £200,000 10%
£201,000 and above 10.5%
Remember, as the car depreciates the VED would decrease.
This would mean those with a Bentley Mulsanne would pay £34,500 pa.
A much fairer system.
It would also create employment – for British and not foreign workers.
How? You ask.
Well sadly, most of the new cars supplied in the UK are not made in the UK. Cars however are in some ways like people: they older they get, the more things need attending to!
A VED system along the lines above would have the effect of encouraging the retention of large prestigious cars. People who could afford to run a big expensive car may well decide to go down the “classic car route” – buy an older prestigious car and spend a lot of money restoring it. To give a hypothetical example:
Suppose a chap buys an older Bentley Mulsanne built in 1991 and worth £15,000. That would mean a VED of £150 pa. Let us suppose the fellow has a specialist restorer put the car into showroom condition. That could cost £30,000. Would that mean the car would then be worth £45,000 and attract a VED of £1,125 pa? No! Because sinking £30,000 into a 1991 Mulsanne that cost £15,000 will only increase its value by £5,000 to £20,000 meaning the VED increases by a mere £50 to £200 pa.
How does this benefit the British economy and help employ British workers?
Simple! Whilst most new cars purchased in the UK are made in Germany and Japan, nearly all car restoration work would be carried out in the UK by many small to medium enterprises and this would give a huge boost to the country’s employment!
However, the treasonous morons masquerading as the government of this country would have it pointed out to them by such as Caroline Lucas that not only would the country’s employment levels increase – so too would its CO2 levels!
SO WHAT!!!!!!!!!