Monday, 14 July 2014

How do they work that out?

From the BBC:

Untaxed foreign cars 'cost millions'

The RAC says the government is missing out on millions of pounds of revenue every year because there are thousands of untaxed foreign cars on British roads.

About 60,000 foreign vehicles are registered with the Driver and Vehicle Licensing Agency every year. However, the RAC said an estimated 15,000 others are not, which it said amounts to about £3m per year in uncollected tax.

No, uncollected tax is simply not a cost. That's like counting all the goals which I have never scored in a Cup Final as a cost. The notional cost to the UK government is equal and opposite to the tax saving for Johnny Foreigner.

While it's very naughty of these people not to register their vehicles like everybody else, Vehicle Excise Duty is less than a tenth as much as duty and VAT on petrol/diesel, so they are not making much of a saving overall, and the tax they pay on petrol more than covers their share of the cost of road maintenance etc.

This logic does not apply to lorries which fill up on the other side of the Channel and then use British roads without refilling here, although I'm not sure why they would, AFAIAA, fuel prices are pretty much the same in the UK, Belgium and France.

They keep burbling on about some sort of Brit Disc for foreign lorries (which seems like a sensible idea to me), but it never gets off the ground. Maybe the EU doesn't like it or something.


The Stigler said...

£3m? You couldn't get Accenture or one of those other agencies to run the system to find those cars for £3m per annum.

Ben Jamin' said...

This does highlight that people can't differentiate between cost and spending.

Which really comes to the fore concerning means-tested benefits.

"the Government is spending too much, so more benefits should be means tested" they say.

Yes, this cuts "spending" but increases the overall tax burden i.e "costs". Doh!

Kj said...

The swiss solves this foreign lorries issue with requiring everyone driving on the national highways to have a disc, regardless of nationality. The caveat is you can't get anything but annual passes. Sneaky.

Mark Wadsworth said...

TS, exactly.

BJ, yes, see also means testing of Child Benefit for higher earners. Is that a reduction in government spending or an increase in taxation?

Kj, CH is not in EU. And to be fair, you can whizz through their country in a couple of hours without filling up the tank, so they cannot recover most of the "loss" with fuel duty.