DVLA lose money on tax [Discussion]

[Ryannn]

It's been reported, not suprisingly, that since the abolition of tax disks, the DVLA have actually lost money, rather than the saving they predicted.

I wonder how much of this is due to people not back dating tax and how much is due to people buying cars which attract lower VED?

From the article:

Revenue from vehicle excise duty fell by £93 million in the year after the abolition of the paper tax disc, official figures show.

The Driver and Vehicle Licensing Agency's (DVLA) annual report and accounts show that revenue from vehicle tax fell from £6.023 billion in 2014/15 to £5.930 billion the following year.

Motoring organisation the RAC described the figure as "a significant sum" that merits further investigation, amid fears that vehicle tax evasion has increased.

www.telegraph.co.uk/news/2016/07/20/dvla-lost-out-on-93million-a-year-after-abolition-of-tax-disc-am/?campaign_id=A100&campaign_type=Email

[composimmonite]

So simple answer is abolish altogether and add to fuel ? Savings on Civil Servants / premises / administration alone would be massive

[Dez]

I think they admitted that creating a zero tax band for 'Eco' cars was a pretty spectacular own goal, and they've lost a fortune in revenue as so many people are buying them. So much so they're abolishing it next year I believe.

[Ryannn]

Jul 20, 2016 18:50:20 GMT Dez said:

I think they admitted that creating a zero tax band for 'Eco' cars was a pretty spectacular own goal, and they've lost a fortune in revenue as so many people are buying them. So much so they're abolishing it next year I believe.

Yeah, doesn't the replacement scheme consist of a massive initial fee?

[carledo]

Jul 20, 2016 18:52:07 GMT Ryannn said:

Jul 20, 2016 18:50:20 GMT Dez said:

I think they admitted that creating a zero tax band for 'Eco' cars was a pretty spectacular own goal, and they've lost a fortune in revenue as so many people are buying them. So much so they're abolishing it next year I believe.

Yeah, doesn't the replacement scheme consist of a massive initial fee?

No that's what you get automatically from buying an "eco". But the money goes mainly to the manufacturers not the government.

Or have I just missed some delicate sarcasm?

What I heard was you get the first year or two free and after that you start paying. But it might have been rumour or bullpoop, or even worse, a newspaper report!

I can't believe tax dodging is on the rise, with all the ANPR cameras about, it would be difficult to get away with, even where I live, where policemen are rarer than a pothole free road!

Steve

[Jizmondo Scrotmondo]

I'm also amazed that people are "tax dodging"

I had the impression that's it's harder than ever. How are people managing it?

[skinnylew]

Tax dodging?? in so much as parking on a SORN vehicles on the public highway. I get at least 1 complaint a week about an abandoned vehicle and more often than not it's on a SORN, frequently with not mot. Now obviously they're not really being used but it's still tax dodging I guess. It also surprising the amount of stories I hear of people without insurance, paying for the first month then cancelling etc. Woman in a newish (09 plate) BMW 5 series T boned a car at a junction recently, she had done exactly that (a community nurse no less) and got away without for 6 months. In London. Supposedly the most ANPR covered area.

[ferny]

It'd be interesting to see the number of vehicles taxed in those years, rather than just the money.

[ChasR]

Jul 20, 2016 18:25:22 GMT composimmonite said:

So simple answer is abolish altogether and add to fuel ? Savings on Civil Servants / premises / administration alone would be massive

I know of loads of people that say that, and IMHO it would never work. I think VIP on here said duty would have to rise by an additional 40p at least to cover it.

You also have to think of businesses. People moan about how expensive taxis are ; that cost would soon hit you in increased fares, and that is not exactly cheap. Where I work with a fleet of vehicles for a large bottled gas company it would also hit their profits massively. Although we pay alot for tax (around £1200-1800/year are some of the larger trucks) they also incur other costs like operator licences etc. which by law any vehicle over 3.5T has to have if used for a business; that is another massive cost. The costs would rise IMHO alot more than you think.

The smartarses would say, fine, it would encourage public transport. It would for areas that cater for it ; London and Brighton where the links are very good. For the rest of the country where some trains arrive by the hour or every 2 in addition to them now being expensive (It costs me £13 to get a return from Warwick to Birmingham New St.) that is also unworkable. I read somewhere that trains have been the busiest they have been since WWII, and I know the trains when I have used them recently have been far from quiet! As for the Bus service that is a joke around these parts and simply doesn't compare to the larger cities. The public transport system in other countries (Holland and Finland for example) really does show up our country.

That and I don't really trust our Government. When the Scandinavians are taxed @25% and get far more back than we do @20% you know the above suggestion is a pipe dream in all honesty.

ANNNNNYYYYYWAAAAAYYYYYYYY, back on track, the revenue going down is for a few reasons:

1)40 year rolling exemption - Cars that were once undesirable are now desirable. OTOH it is discouraging ringing to some extent, and to those who see no harm in doing it.
2)New cars with lower tax ; A friend of mine bought a MkIII Focus 1.6 TDCi because of low road tax @ £30. A few new cars colleagues drive are free. Bar the 1970 Beetle years ago I have never paid less than £140 a year on tax (I've been too poor to buy anything with cheap tax (i.e less than £100)!)
3)Lack of police. Just how many policemen do you see in cars these days. I know around me it is very little, something an ex-copper has told me and my MOT tester who knows of a few bobbies. ANPRs have gone up, but not as many as you think. I don't know of many near where I live TBH.
4)No visual reminder. That goes for MOTs as well. I have been caught out there, generally when I go to tax the car and the same goes for other bits.

As for the "loss" I'd like to see how they came to that figure. While I agree it is true. They have saved alot in other areas including no tax discs, thus no official documents to print. That in turn requires no couriers to drop off the discs to the Post Offices. Less police force about will also be a saving.

What I am saying I guess is that it is not as straightforward as it looks.

[VIP]

Jul 21, 2016 8:56:21 GMT ChasR said:

Jul 20, 2016 18:25:22 GMT composimmonite said:

So simple answer is abolish altogether and add to fuel ? Savings on Civil Servants / premises / administration alone would be massive

I know of loads of people that say that, and IMHO it would never work. I think VIP on here said duty would have to rise by an additional 40p at least to cover it.

You also have to think of businesses. People moan about how expensive taxis are ; that cost would soon hit you in increased fares, and that is not exactly cheap. Where I work with a fleet of vehicles for a large bottled gas company it would also hit their profits massively. Although we pay alot for tax (around £1200-1800/year are some of the larger trucks) they also incur other costs like operator licences etc. which by law any vehicle over 3.5T has to have if used for a business; that is another massive cost. The costs would rise IMHO alot more than you think.

The smartarses would say, fine, it would encourage public transport. It would for areas that cater for it ; London and Brighton where the links are very good. For the rest of the country where some trains arrive by the hour or every 2 in addition to them now being expensive (It costs me £13 to get a return from Warwick to Birmingham New St.) that is also unworkable. I read somewhere that trains have been the busiest they have been since WWII, and I know the trains when I have used them recently have been far from quiet! As for the Bus service that is a joke around these parts and simply doesn't compare to the larger cities. The public transport system in other countries (Holland and Finland for example) really does show up our country.

That and I don't really trust our Government. When the Scandinavians are taxed @25% and get far more back than we do @20% you know the above suggestion is a pipe dream in all honesty.

ANNNNNYYYYYWAAAAAYYYYYYYY, back on track, the revenue going down is for a few reasons:

1)40 year rolling exemption - Cars that were once undesirable are now desirable. OTOH it is discouraging ringing to some extent, and to those who see no harm in doing it.
2)New cars with lower tax ; A friend of mine bought a MkIII Focus 1.6 TDCi because of low road tax @ £30. A few new cars colleagues drive are free. Bar the 1970 Beetle years ago I have never paid less than £140 a year on tax (I've been too poor to buy anything with cheap tax (i.e less than £100)!)
3)Lack of police. Just how many policemen do you see in cars these days. I know around me it is very little, something an ex-copper has told me and my MOT tester who knows of a few bobbies. ANPRs have gone up, but not as many as you think. I don't know of many near where I live TBH.
4)No visual reminder. That goes for MOTs as well. I have been caught out there, generally when I go to tax the car and the same goes for other bits.

As for the "loss" I'd like to see how they came to that figure. While I agree it is true. They have saved alot in other areas including no tax discs, thus no official documents to print. That in turn requires no couriers to drop off the discs to the Post Offices. Less police force about will also be a saving.

What I am saying I guess is that it is not as straightforward as it looks.

Yup, agree with the above.

Regarding the 'put VED on petrol' arguement, here are my workings and sources.


Average mileage for a vehicle per year is now around 7000.¹

Average VED per year is around £320.²

Let's say average MPG is now 40mpg, not an unreasonable assumption.

7000m/40mpg is 175gallons.
175gallons x 4.5l/gal is 787 litres
787l x £0.40/l for VED is £314.80

Sure, the MPG may be a little on the high side, but even at 30mpg the number still works out to £0.30/l.

It's certainly not the 1 or 2 pence people are expecting.



¹: Last records from 2013 show average annual mileage has dropped to 7900, from 9200 when recording began in 2002.

www.gov.uk/government/statistical-data-sets/nts09-vehicle-mileage-and-occupancy

The actual figure now is probably closer to 7500, I just rounded it down. Even if you plug in the 7900 from 2013 it doesn't make that much difference.


²: As for the average VED value per car, I took this data showing the number of licensed vehicles on the road in 2014, by VED band.

www.gov.uk/government/uploads/system/uploads/attachment_data/file/420387/veg0205.xls

The 'unknown' section will be vehicles registered before 2001 subject to the <1549cc and >1549cc VED bands, plus imported vehicles where the CO2 figure isn't known.

Then I applied the 2015 VED rates to each column to give a total revenue figure, and finally divided this by the number of cars to give an average per car number. That gives us a figure of £170/car.

However you also need to factor in revenue gained from other road vehicles, specifically all the LGV/HGVs and buses.

That is around 30% of the total vehicles on the road. LGV VED starts at £225/year and HGV VED ranges from £165/year for a rigid 3.5 ton to £1850 for a 40-ton artic unit. Buses are £330/year average depending on passenger capacity.

It's these higher VED class vehicles which drag the average up.

I used the 2015 VED bandings.

[colnerov]

Hi, I don't think there's any single reason for it. It's a number of reasons some already mentioned, another not mentioned is that since you don't 'inherit' the tax already on the car when you buy it people are changing the way they buy and sell cars. Paranoid about the government getting two payments for the same month means people SORN before selling and SORN the first month when buying usually at the changing of the month.

Colin

[keithyboy]

What would be more interesting than just reporting a loss is whether the amount received is in line with the forecast of what they expected to receive. If people are swapping to cars with lower rates of tax and the yield is falling as a result then the structure of the tax is having the desired effect. If the reduced yield is as a result of evasion it clearly isn't. British Governments have long favoured controlling people's behaviour through taxation with so-called sin-taxes. The theory is that if your sin-tax stops people doing something, you get less tax but reap other benefits (increased health, reduced NHS costs, reduced traffic, reduced emissions etc). Unless the canny British public come up with a better plan (smuggling fags and booze, driving cars with no tax, laundering marked diesel etc).

This is an interesting read:

www.gov.uk/government/uploads/system/uploads/attachment_data/file/479992/ved-2015.pdf

As regards putting VED onto fuel. We are told that the Government got £5.93 billion from VED in 2015/16. The ONS report that in the same year 46.567 billion litres of fuel were released for consumption in the same period. Dividing one by t'other gives a figure of nearly 13p a litre (assuming you apply it to all road fuels rather than tweaking it to increase the duty on diesel or reduce it on biodiesel). You might get some savings through not having to process VED but not as much as you might think as you would still need a system of recording ownership, ensuring poeple are insured and have an MoT etc though.

[slackerTHEpinstriper]

So how does this affect the Scene Tax?

[jamesfuller]

Another thing that could affect it is how payment is spread.

My 8 cars are taxed on direct debit, no way I can forget about any then. So for those cars, they are taxed and legal but they don't have the money for them up front.

Also, I should think fines have dropped off a fair bit. I have had 3 fines on the old system as I forgot to tax or make a sorn, would the money from these fines be included in the final tally?

[craig1010cc]

Have to admit that I think total VED revenue / total number ltrs of fuel sold is a more accurate calc for generating a potential increase, rather than trying to derive it from other sources of data (although I do like a good bit of spread sheet engineering ) although it does account for foreign cars purchases of fuel in the cals, where as these would prob be the 'bonus' revenue that would cover the costs of effectively administration of all vehicles being on £0 VED.

[VIP]

Jul 21, 2016 9:50:39 GMT keithyboy said:

What would be more interesting than just reporting a loss is whether the amount received is in line with the forecast of what they expected to receive. If people are swapping to cars with lower rates of tax and the yield is falling as a result then the structure of the tax is having the desired effect. If the reduced yield is as a result of evasion it clearly isn't. British Governments have long favoured controlling people's behaviour through taxation with so-called sin-taxes. The theory is that if your sin-tax stops people doing something, you get less tax but reap other benefits (increased health, reduced NHS costs, reduced traffic, reduced emissions etc). Unless the canny British public come up with a better plan (smuggling fags and booze, driving cars with no tax, laundering marked diesel etc).

This is an interesting read:

www.gov.uk/government/uploads/system/uploads/attachment_data/file/479992/ved-2015.pdf

As regards putting VED onto fuel. We are told that the Government got £5.93 billion from VED in 2015/16. The ONS report that in the same year 46.567 billion litres of fuel were released for consumption in the same period. Dividing one by t'other gives a figure of nearly 13p a litre (assuming you apply it to all road fuels rather than tweaking it to increase the duty on diesel or reduce it on biodiesel). You might get some savings through not having to process VED but not as much as you might think as you would still need a system of recording ownership, ensuring poeple are insured and have an MoT etc though.

Whilst the arguement for using VED revenue vs litres of fuel sold works in principle, there is one flaw. An awful lot of fuel sold goes nowhere near a road vehicle (both red diesel and regular fuel) and therefore if you include their use in that calculation you're going to have a lot of owners of plant machinery, farm equipment, forklifts, ships, boats, generators, right down to chainsaws, lawnmowers etc paying additional tax that doesn't apply to the machine they are putting fuel in.

ONS figures for fuel use in 2013 (latest stats available) show 14.2m tonnes (16b litres) of petrol and 24.3m tonnes (33b litres) of diesel used. I have no idea what proportion of that figure will be used by non-road vehicle or equipment, but it needs to deducted from the total before you can divide the VED revenue figure by it.

Therefore it makes more sense to use the calcs based on road vehicles average fuel use only.

[HoTWire]

Jul 21, 2016 9:51:59 GMT slackerTHEpinstriper said:

So how does this affect the Scene Tax?

Scene tax, like window tax is only applied to the wheels on the car.

[pauly22]

My sister boyfriend, changed cars forgot to worn the car but scrapped it. They sent him a £1000 fine for the week that it was uninsured,

I know he was wrong but it's a bit harsh. Maybe there're trying to get some extra money in.

If I sell my car on the 10th of the month they won't refund that month, and the new owner will have to tax it half way through the month, the dvla have been paid twice for the same month. Can't believe there short of cash.

Free road tax is unfair, all car damage the roads weather electric or petrol/diesel, all cars should pay for the roads, not just polluting ones.

[duggers]

Jul 21, 2016 17:40:50 GMT pauly22 said:

My sister boyfriend, changed cars forgot to worn the car but scrapped it. They sent him a £1000 fine for the week that it was uninsured,

I know he was wrong but it's a bit harsh. Maybe there're trying to get some extra money in.

If I sell my car on the 10th of the month they won't refund that month, and the new owner will have to tax it half way through the month, the dvla have been paid twice for the same month. Can't believe there short of cash.

Free road tax is unfair, all car damage the roads weather electric or petrol/diesel, all cars should pay for the roads, not just polluting ones.

It hasn't been road tax for years. Vehicle Excise Duty (VED) so you get taxed for using a vehicle.
Its the stealth taxes that they don't seem to put figures out on, insurance tax which goes up again shortly when its only just been increased as an example.

[mondeogrd]

The only thing i really don't like about VED is double taxing a car! How really hard was it to introduce date to date tax rather than keeping the month to month, if you catch my drift!

But then i thought about it a wee bit more and started to consider how VED for newer cars is set, especially when you look at the way manufacturers get to the figures and how the rules can be interpreted! And seen as ive been thinking about this for a hell of a long time, my mind really started to run away with me! I then considered why someone driving a commuter rocket, pays less VED than my wifes Focus, yet probably does 3-5 times more miles than her a year.

For me, adding a wee bit more duty to fuel at this time is the only way to find a fair way to cover this. In that way, everyone can pay for the way they use their cars and no real need for the SORN system.