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