Car tax dodging soars since discs axed

THE number of drivers evading car tax is estimated to have trebled after the Government scrapped paper tax discs on vehicles, official figures show.

About 755,000 vehicles failed to pay vehicle excise duty this year, the Department for Transport (DFT) said, the highest evasion rate in a decade.

An estimated £107million a year is now being lost because more car owners have started avoiding the levy, according to data published by the DFT.

Paper tax discs were scrapped in 2014 in a move which the Government said would eventually save the DVLA around £7 million a year.

However, research found that the “evasion rate” among drivers has since trebled. Tax has not been paid for an estimated 1.8 per cent of vehicles this year, compared with 1.4 per cent in 2015 and 0.6 per cent in 2013.

Last night, the Government came under pressure to reinstate the windscreen discs, as transport experts including the head of the AA called for their return. Edmund King, president of the AA, said: “Looking at how much the new system is costing there is a logical case for bringing back paper tax discs and the Government should consider doing so.

“We did say prior to the removal of paper tax discs that it would have an effect on drivers paying tax, because it acts as a visual deterrent.

“If your tax disc expired in May but you still have it in November people will know and can easily report you for the police. It is also embarrassing to have an untaxed car on your drive. Now no one can tell if you haven’t paid tax which could be why more people are doing it.”

The paperless system was introduced in 2014 by George Osborne, the chancellor at the time, who said the UK was moving into the “modern age”.

Paper tax discs, introduced in 1921, were replaced with a digital system which automatically knows whether a vehicle is taxed or not by using an Automatic Number Plate Recognition system to read registration plates.

However, it means that ordinary members of the public and police officers are unlikely to spot an untaxed car in the same way as when paper discs were displayed on windscreens.

Under the new system, drivers who pay via direct debit have their tax renewed automatically, but those who do not are required to manually renew their tax, despite having no visual reminder on their vehicle.

Of the estimated 775,000 unlicensed vehicles, just over half had been unlicensed for two months or less, suggesting some drivers had forgotten their renewal date, although reminders are sent by the DVLA.

The figures also show that 12 per cent of unlicensed vehicles in traffic are declared incorrectly to be off-road and therefore exempt from VED, up from 1 per cent in 2015.

A DFT spokesman said: “The vast majority of motorists tax their vehicles correctly and we have made it easy to do it online.” Government sources said the rise in tax evasion was temporary and was expected to return to normal in the coming years.

The abolition of the paper tax disc and the requirement to renew vehicle excise duty (VED) online has probably increased the number of untaxed vehicles on the road. Is anyone surprised? Critics of the decision – part of Whitehall’s obsession with going digital – predicted that innocent drivers would end up forgetting to tax their cars and unscrupulous motorists would try to get away without paying. They were right.

Official figures show that evasion has trebled since the paper tax disc was scrapped, at an estimated cost to the Treasury of upwards of £100million a year. Motoring groups fear there will be less cash for essential repairs, since from 2020 receipts will directly fund improvements to the strategic road network.

It is a time for a rethink. Road tax is a polarising revenue-raiser and next week’s Budget is expected to increase the penalty on drivers of diesel cars, who were encouraged to switch from petrol vehicles only to be punished for doing so. Most motoringbased revenue comes from fuel duties and VAT, which bring in about £30billion annually. But the greater efficiency of modern engines means the take per vehicle is declining, alongside the falling revenues from VED. And what happens with the accelerating move to electric cars? To plug the revenue gap VED would have to rise significantly.

One radical alternative would be to privatise the road network and charge drivers for use on a per-mile basis, removing or reducing all motoringrelated taxes. Most drivers would pay less than now, and the sale could bring in £150 billion to spend on other public programmes. Looking ahead, some form of road pricing will be hard to avoid.