Monday, July 5, 2010

£46bn in tax every year

It's an amazing number, but between road tax, the tax on fuel and the various sales taxes levied on new cars, British drivers pay a total of £46bn every year (source The AA). Divided by the population of the country, it means every man, woman and child pays an average £750 in motoring-related taxes. That's an unfair number because of course not every person in England drives. So if you take the estimated number of drivers (20m) instead of the total population (61.5m), it means every driver pays about £2300 per year in motoring-related taxes. That doesn't include the new 'showroom' tax that was introduced in April this year which adds up to another £515 to the cost of a new car purely in taxes.
For those of us in America, to put that into perspective, it's the equivalent of each of us paying US$3400 in motoring taxes every year.

1 comment:

Stuart C said...

I think the AA may have grossly overestimated this - you list "sales taxes on new cars" as a contribution to a yearly figure. Many drivers never buy a showroom-new car in their life, and of those that do, many will not buy a replacement new car every year!

Road tax makes a tiny contribution to this figure - for any fairly fuel efficient car it is well under £200/year and it's under £100/year for very efficient vehicles.

Fuel taxes are hard to estimate accurately as the rates change, but being reasonably conservative I think I will pay around £1500 in petrol taxes this calendar year, if I use my car consistently (30-min commute to work but car-sharing with 1 colleague; a shopping trip every couple of weeks, and 5 to 10 long trips per year (around a full day's driving each way, each trip).

So I can see how this £2300 might just be right if I bought a new car every year - but I don't, I bought an £800 second-hand banger and use the Car Bibles to keep it running :)