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‘The motor vehicle tax regime in the UK creates a failure of trust’

MAG UK director Ian Churchlow wrote an opinion piece on the motorcycle taxation system in the United Kingdom. Ian Churchlow is also MAG UK’s delegate to FEMA.

My friend Andy and I were discussing the concept of fairness when it comes to the governments’ environmental taxation policy on motor vehicles. Our conversation was the sort of exchange that often develops in the convivial atmosphere of a wine bar after good food and a few glasses of alcohol. Andy rides a fabulous six cylinder BMW 1600GT which he mainly uses for two-up touring abroad but being UK based, he expressed some concerns about the tax he is forced to pay to ride his motorcycle.

The author, Ian Churchlow

How much should a motorcyclist pay in ‘road tax’ when the driver of a similar capacity car pays substantially less tax or no tax at all? Is the amount of Vehicle Excise Duty (VED) a motorcyclist pays, ‘fair’ when the government has declared that the reason for the current vehicle tax regime is that the biggest polluter should pay the most?

The requirement for vehicles to pay and display tax discs in the United Kingdom began in 1921 with the implementation of the 1920 Roads and Finance Act. It was originally intended that revenues raised from Road Tax would pay for the upkeep of UK roads but by 1937 this concept had unraveled and Road Tax revenue was no longer exclusively used to pay for road maintenance.

Motorcycles are currently charged VED on the basis of engine capacity and not on their environmental credentials, despite the fact that a motorcycle is, on nearly every occasion, the much more environmentally friendly transport option. Bikes are lighter, they use less raw materials in their construction, they use less fuel, take up less road space and when we arrive at our destination they require only a fraction of the parking space occupied by a car. They also reduce traffic congestion for other vehicles when used instead of a car. Despite all this, our disproportionately high VED remains, either as a reflection of the ignorance of our politicians or a subliminal message that motorcycling is essentially wrong and that we should be discouraged from owning or riding a motorcycle.

The existing UK motor tax regime has a number of fundamental flaws, which make it structurally unfit for purpose. Put simply, the UK tax on motorcycles conflicts with the wider European trend of including environmental and safety incentives on all motor vehicle taxation and the UK’s current system absolutely violates the concept of equal treatment for all road user groups. The present tax levy has become nothing more than a fiscal tax on motorcycle ownership and it has nothing to do with the comparative benefits that a motorcycle brings to the environment.

Motorcyclists already pay more than their fair share of tax, contributing to the public purse when registering a new motorcycle, paying VAT on the price of a motorcycle, VAT on motorcycle parts, VAT on accessories and services, fuel taxation and the greatest imposition of all, tax charged on tax via the 20% VAT charged on the total price of fuel which includes the fuel duty (this equates to around *67% of the price we pay for each litre of fuel (*figures RAC Foundation 2016)) not to mention the additional 9.5% tax we pay on insurance premiums!

Motorcycle businesses employ thousands of tax-paying staff. Travel and tourism businesses forward VAT and income tax revenues generated from sales to motorcyclists. So why does the government, chose to further penalize motorcyclists by insisting that we are liable for a disproportionately high VED compared to car drivers? One can only surmise that the reason they have chosen to do this is because they believe they can get away with it – motorcyclists are a minority and it is always much easier to impose an unfair tax on a small group of individuals than on the majority of a population.
Due to the additional VED motorcyclists are forced to pay, the result, not surprisingly, is a reduction in motorcycle related discretionary spending. So contrary to popular wisdom and the politicians’ hopes, the current situation actually reduces overall tax revenues (because money is no longer spent on motorcycling activities). Thus high motorcycle VED rates harm motorcycle businesses and the industry in general. Motorcycle VED also slows the renewal rate of the motorcycle fleet, which seriously conflicts with both the environmental and safety targets set by the government in its transport policy.

The current motor vehicle tax regime in the United Kingdom creates a failure of trust in the parliamentary system because riders perceive the regime as unjust.

Other countries have accepted the facts and recognise motorcycles as a valid form of transport. Our own politicians need to be guided towards the truth of the detrimental consequences of our so called environmental motor taxation system. British motorcyclists and the voting public at large should not accept such political arrogance and the enforcement of an explicitly harmful tax law.

Written by Ian Churchlow, Director TMAG UK