Tag Archive | "purchase tax"

Will Road Tax Be Replaced By A One-Off Fee?


Many, many years ago there was a charge made on goods. It was called Purchase Tax. You bought something and its price was augmented with an additional fee. Over the years this has morphed into Value Added Tax whilst all the time gradually increasing the amount of duty added. So what? We’re all used to governments looking at new and sneaky ways of relieving us of even more money so that they don‘t have to cut back on the chocolate Hobnob‘s on the Cabinet table.

One of the other ways they do this is to charge us Vehicle Excise Duty to drive on the roads. As you know all too well, we pay this annually. Currently it is based on CO² emissions. The less polluting your car, the less tax you pay. This is designed to get us into small, clean cars – whether we want to or not - by making costs increasingly expensive to do otherwise.

Well, now some chaps at something called a ‘think-tank’ have come up with another wheeze. Instead of paying road tax (VED) every year, new car buyers should, instead, pay a new one-off purchase tax based on a car’s emissions (in addition to VAT, before you ask). The more polluting the vehicle, the more you pay. Apparently, the present Energy Secretary is looking upon this benignly.

Hang on, you might well say, that doesn’t seem such a bad idea. Pay once and be done with it. Well, in the same way that you casino online would look suspiciously at a pie well beyond its sell-by date, pick it up and have a bit of a sniff.

An example widely quoted is that of a 1.25L petrol Fiesta. This currently costs (average) £9084. Its new price would be £10734. That’s a difference of £1650! The current model emits 124g/km and thus attracts a VED of £100pa. Assuming nothing changes that would mean that, to recover your additional outlay, you would have to keep the car for sixteen and a half years! Realistically, how long does the average car last?

For sports and super cars the purchase tax would be huge. Also, what would happen to used car values? Presumably cars would still need a paper licence to put on display for MOT and insurance purposes. How would that be funded? Feel free to pick even more holes in this ill-though through idea and let us know.

Does this then mean that electric cars would be free of such a tax? Terrific – or rather it would be if it were not for the EU ruling that says we must switch off our coal-fired power stations next year, potentially resulting in power outages as the remaining system fails to cope. Where will electric cars be then? Let us hope they think this through.

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