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A report by an expert at the University of Manchester found that low-income drivers are effectively paying more than double (212 percent) per mile to subsidize wealthier road users.
The study for insurer By Miles shows that households with an annual income of less than £ 18,125 drive fewer kilometers, make fewer journeys and make more efficient, newer cars too expensive to buy. Even so, vehicle excise tax (often referred to as vehicle tax) is still levied at a flat rate – meaning lower-income households end up paying for wealthier households to use the roads.
When comparing the driving habits of households with lower and higher incomes, the analysis shows driving distance, frequency and affordability as the main differences.
Lower-income drivers have significantly less impact on UK roads, as they travel 40 percent fewer miles and make 17 percent fewer journeys than those with higher incomes. When the two groups were compared, this resulted in an effective vehicle tax rate of 10 pence per mile for lower-income drivers, while higher-income drivers enjoyed an effective tax rate of only 3.2 pence per mile.
When it comes to buying new, greener vehicles, only one in seven (15 percent) households in the lowest income bracket owns a car that is less than three years old, compared with three in ten (28 percent) households with the highest income. In addition, drivers from low-income households are less likely to be able to afford more efficient cars such as electric or hybrid models. Only one fifth (22 percent) of this group owns cars in the lowest tax brackets.
The author of the report, Dr. Diego Perez Ruiz – of the University of Manchester’s Department of Social Statistics – says the policy is clear, given the recent UN report claiming the planet has already been irreversibly damaged, that policies need to be adjusted to ensure that further damage is limited and that drivers of fossil fuel vehicles are actively incentivized to drive less.
They are calling on the government to introduce a new car tax system based on usage, resulting in a cheaper car tax for drivers with shorter mileage. This encourages everyone to drive less while reducing emissions and creating a fairer, greener future for all road users.
“This new analysis clearly shows that low-income households are paying a ‘poverty premium’ to use their car – any future reforms to the vehicle excise system should take this into account and aim to reduce the disproportionate burden on poorer families. “says Dr. Diego Perez Ruiz.” There is no controversy in suggesting that those who use the roads the most should shoulder more of the burden when it comes to paying for them, “said James Blackham, CEO of By Miles, “We urge the government to take a fairer approach to drivers who drive shorter miles, taxing and taxing motorists for the kilometers they actually drive and rewarding those who drive less. We believe a new one.” Model would not only save most drivers money, but would also encourage and reward: “People to reduce emissions – however we choose to travel.”
Research sheds light on how energy costs differ across the country Provided by the University of Manchester
Quote: Study: Tax Regulations Punishing Low Income Drivers (2021, August 25), accessed August 25, 2021 from https://phys.org/news/2021-08-low-income-drivers-tax.html
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