Petrol tax tops £1,100 a year for most car own­ers

Yorkshire Post - Motoring - - NEWS -

A RE­CENT re­port by the Of­fice of Fair Trad­ing has re­vealed that al­most 60p of ev­ery £1 spent on petrol or diesel goes to the Trea­sury in duty and VAT.

That’s the equiv­a­lent of about 78p on a litre of un­leaded fuel cost­ing £1.30.

And, while the VED sys­tem was over­hauled in 2005 so that an­nual charges re­flect ve­hi­cles’ en­vi­ron­men­tal friend­li­ness, ex­perts warn that in the fu­ture even clean cars may be taxed more. Mov­ing to more en­ergy-ef­fi­cient ve­hi­cles means the tax rev­enue is de­creas­ing.

Last year, the RAC Foun­da­tion pre­dicted that this would cause a £13bn short­fall by 2029.

The Lo­cal Gov­ern­ment Au­thor­ity (LGA) says that the Trea­sury takes £38bn from duty and VAT on fuel plus Ve­hi­cle Ex­cise Duty an­nu­ally. With about 34 mil­lion cars in the UK to­day, this amounts to £1,117 for each car owner.

The RAC’s Peter Wil­liams says that the LGA’s fig­ure of £38bn in taxes might even be too con­ser­va­tive. “We be­lieve the gov­ern­ment re­ceives closer to £45bn in mo­tor­ing tax­a­tion,” he said, which would work out at more than £1,300 each in tax a year. He would like to see cen­tral gov­ern­ment pro­vide lo­cal au­thor­i­ties with a larger ringfenced sum ev­ery year which coun­cils “com­mit to spend­ing prop­erly”.

Peter Box, chair of the LGA’s econ­omy and trans­port board, agrees. “The back­log in re­pairs is grow­ing longer each year with the town hall bill to clear it now at £10.5bn and ris­ing.

“That is why coun­cils need in­creased and con­sis­tent high­ways fund­ing to in­vest in the wide­spread resur­fac­ing projects des­per­ately needed for a long-term im­prove­ment.”

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