U-turn over car tax hikes

By by Adrian Darbyshire adrian.darbyshire@iomtoday.co.im Twitter:@iomAdrian in Transport

Highways chiefs have performed a U-turn over car tax hikes.

There was outcry in April when it emerged that thousands of motorists would be paying much higher vehicle duty this year.

The biggest increases would have been for the average older car with a standard, smaller engine size. Some drivers would have paid less - although curiously the reductions were for cars which produce the highest CO2 emissions.

But the proposals, which had been due to go before the April Tynwald, were withdrawn at the 11th hour by Infrastructure Minister Ray Harmer to allow his department to provide ’further clarity’ on its proposals.

Now they are back on the agenda for this month’s Tynwald sitting - but with some important changes. Increases for most smaller engine sizes have been reduced, while those for bigger engines are larger, and there is no longer a reduction for the biggest polluting cars.

And plans to charge white van man a flat rate of £200 for their small commercial vehicles have also been dropped.

Vehicles with 1,000-1,200cc engines will pay £111, up from £105 but down from £139 that had been proposed in April and cars with 1,200 to 1,800cc engines will pay £173, up from £163 but much less than the £194 proposed originally.

In contrast to the previous proposals, there are increases for every band of CO2 emissions, apart from the very lowest, ranging from £2 to £35.

And there is also a U-turn on the duty for motorbikes. It was due to be £40 for those under 125cc and £50 for all others.

Now it’s £41 for under 125cc, £52 for 125-400cc and £78 for over 400cc.

The proposed rate for cars are £54 for under 1,000cc; £111 (1,000-1,200); £173 (1,200-1,800); £244 (1,800-2,500); £398 (2,500-3,500); £491 (3,500-5,000) and £522 (above 5,000cc).

A Department of Infrastructure spokesman said: ’There were concerns that the previous order, which corrected the historically lower rate for capacity-based duty, was not the best way to fund the worthwhile savings for commercial vehicles, motorhomes, motorcycles, electric vehicles, classic vehicles and vans used for work purposes.

’With the department’s income budget already set by Tynwald it was not possible to simply reduce the impact on owners of vehicles with capacity-based duty. The department had to review the entire proposal.

’The minister decided that the fairest way forward was to provide for a general increase of 6 per cent above the duty set in 2015 and to allow for police vehicles and welfare vehicles to be zero-rated for duty and electrically propelled vehicles zero-rated for three years.

’The minister is committed to a full review of the duty system. Whilst the department needs to secure each year the funds required to maintain the highway network, the Minister is keen to look at new approaches to funding this maintenance.

’The department will be exploring a range of issues, including refinements to the current concepts, including payment by instalments and six-month licences, as well as more significant changes such as payment by fuel usage or mileage travelled.

’The department is also keen to make sure that whatever system is used, those who pay to use their vehicles can be confident that they are contributing appropriately to the upkeep of the highway network.

Consequently, the department will look at ways that make it easy for vehicle owners to pay and easy for the department to check that the right duty has been paid.’

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Gav · 13 days ago · Report

A car used everyday crossing the Mountain causes far more damage than a bike used 2 weeks a year, but the biker must pay for the whole year. Charging for services that the user does not want or has ordered must be regarded in my view, as deliberate, even illegal, overcharging.

Might as well · 13 days ago · Report

The mistake everyone is making here is trying to logically work out what the heck the Government are up to. TBH I gave up trying when I changed from a 2003 2 Litre petrol car to a 2010 1.8 litre petrol and my tax went up! Smaller engine, better Co2 emissions but more expensive, go figure!!

Spook · 13 days ago · Report

Motorists are a soft touch for governments everywhere. Over here annual mileages are low and fuel prices are an emotive subject whereas VED is less obvious on a daily basis than fuel prices. Result? The polluters end up paying relatively less than the average Joe gets stung. I say reduce VED and increase fuel taxes because sadly our profligate governments in the past and still at it need the taxes coming in.

Conch · 14 days ago · Report

I agree with your comments about inflation @Richeader, it is driven here by hikes everywhere and you are right @Fell - higher mpg would lead to more electric/hybrid car useage and possibly increased use of public transport and the visitors contributing to road maintenance. Why don't the isle of man take a leaf from Cumbria Council and others who are repairing roads from plastic (beads made from recycling millions of used plastic bottles) reducing landfill at same time. And yes it works.

Fell · 14 days ago · Report

The 'Biosphere Friendly' alternative would be, as has been raised in the past, to replace this with an extra tax on fuel. Higher mpg (& CO2 emitting) bigger engines would pay more. It would encourage a move to hybrid and electric vehicles. It might also encourage more use of public transport as well as getting fuel buying visitors to contribute to road maintenance. The administration of the system would cease. Treasury already has a system to collect VAT and excise per litre sold.

Manx J · 14 days ago · Report

pper, couldn't agree more with the dismal waiting dates for Bike/Car tests. My query is why are we getting price increases, the roads are a disgrace in most areas (where roads are actually open). I understand a small increase but from £50 to £78 for a bike over 125cc that's almost criminal (do the gas board instruct them how to make the prices up I wonder)

ET · 14 days ago · Report

It is the price we pay @Fell but inexorably linked to a small nation administered by a rather disproportionately large government. There's little the populace can do to solve the issue. It's totally in the hands of the government and their intention to retain their 'bulk' or render it to a sensible and sustainable size. Little point in having deluxe front-line services we cannot pay for.

Tarroo Ushtey · 14 days ago · Report

Fell. I'm not sure you're right to say Ireland's low corporate tax rate leads to other taxes rising. Ireland generates about 8% of taxes from CT. The UK (with much higher rates) generates only 6%. That's because Ireland's low CT rate brings business, investment, jobs (and thus more income tax revenues) to Ireland. Lower tax rates = higher tax revenues. Jeremy Corbyn could do to learn a few lessons from Ireland.

Billding · 14 days ago · Report

But there’s never anything to show for any of the tax rises we keep having imposed, I like the government to employ a bit of honesty and explain why the island is being driven in to the ground with the cost of living and no one went to prison over the MEA debt? Last year my car was £270 to tax whilst the same vehicle to tax in the uk was £230. As for electricity over twice the uk price!!

Fell · 14 days ago · Report

ET it's the price paid for having a smallish population and low corporate taxes in Ireland. Car tax has always been high there. Ultimately as you say you pay or you do with less (or cut the numbers on the government payroll).

ET · 14 days ago · Report

There's a mounting bucket list of totally necessary infrastructure capital schemes that require funding one way or another. Either the public pay through additional taxes, duties, etc, that are merged into everyday necessities of existance or they accept a reduced pension payout. They appear to have had no difficulty in reaching a decision on the way forward. They'll still require a few millions from reserves every year but hey, live & let live and just think, no potholes.

Spook · 14 days ago · Report

I can't help but feel that the VED should be reduced and the tax on road fuel increased to compensate.

ET · 14 days ago · Report

Good grief @Fell, E1480 to tax a 3 litre car. It's not for me to criticise the Irish economy but we do know it's had its problems. But what have they been spending it all on? With past EU subsidies your 3 litre car should have been on the road for nothing with a free valeting service once a month. No wonder the Irish people are legendary for their resettlement around the globe. :-)

Fell · 14 days ago · Report

As CV used to say Department of Incompetence! Small mercies - the 3 litre car I use in Ireland costs €1480 to tax - makes £398 look almost a bargain.

Darwin · 14 days ago · Report

Why the sudden increase (£173 (1200-1800cc); £244 (1800-2500cc) INCREASE OF £71 from band below; £398 (2500-3500cc) INCREASE OF £154 from band below!!! This is not consistent with the next to bands. I would love to hear why we STILL can’t buy tax on a monthly, quarterly, or 6 months basis. And what is the point in taxing cars on Co2 as these figures have proven to be rigged by the manufacturer? And with age these Co2 emission figures will change on a car due to engine wear.

Bluejay · 14 days ago · Report

Where's across?

RichEader · 14 days ago · Report

A 6 percent increase? Based on what, exactly? Is it just a nice round number to pay for the inflated DoI budget? No wonder inflation is higher here than across. It's driven by government hikes everywhere.

pper · 14 days ago · Report

Great, now if only they could run a system where it doesn't take 2 months to take a driving test, compared to about 10 days in the UK

Bluemonday · 14 days ago · Report

Quote ' And there is also a U-turn on the duty for motorbikes. It was due to be £40 for those under 125cc and £50 for all others' Now it’s proposed as £41 for under 125cc, £52 for 125-400cc and £78 for over 400cc. That's not a 'U Turn' It's a price hike for all motorcycles - £2 up for under 125 cc ( currently £39 ) £3 up for 125 to 400 cc ( currently £49 ) and £5 up Over 400 cc ( currently £74 ) Quote 'a general increase of 6 per cent' = Another stealth tax.

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