Tax

“You’re scum and you’re too poor to have a car and you don’t pay road tax”.

Remarks like this are an unfortunately too frequent retort from some motorists when you pull them up for driving like a crack addict looking for their next fix. So should cyclists pay road tax? Well the brief answer is “no” because a bike is not a motor vehicle, but below is a report by Howard Peel on the subject as originally featured at Bikezone.

Those hostile to cyclists often claim that cyclists don’t have any right to use the public road system as car drivers ‘own the roads’ due to them paying ‘road tax’. The following information may be useful to anyone wishing to correct such uniformed views.

Firstly, cyclist, pedestrians and horse riders have a right to use the roads enshrined in law. The use of motor vehicles on the public highway is only allowed under licence and is, in effect, a privilege that may be withdrawn. (For example if a driver does not insure their vehicle or their licence is suspended etc. etc.).

‘Road tax’ is actually motor vehicle licence duty. Cycles are not motor vehicles and so can hardly be expected to have to contribute to such a duty!

All streets are provided with footways and yet no one suggests that a ‘pedestrian tax’ should be levied in order to pay for them. This is despite the fact that the quality and comprehensiveness of the footway system vastly exceeds that of cycle facilities and cycles have almost no impact on the roads system.

The motor vehicle licence is set at a very low level and one of the primary aims in collecting it is to try to limit the number of drivers who fail to insure their vehicles or who have valid M.O.T. certificates. A scheme to check these details would be needed and have to be paid for even if motor vehicle excise duty were to be abolished.

The duty raised through the motor vehicle licence scheme and fuel duty in no way covers the cost of the impact owning a motor vehicle has on others in society. Actual road building and maintenance costs are minimal in comparison with dealing with the costs of road crashes, congestion, the effects of pollution etc. Whitelegg (1992) calculated that if all the indirect costs associated with car use were totalled the private car driver was being subsidised by £20 billion pounds annually. In 1992 motor vehicle tax would have had to be increased to over £1000 per vehicle per year if the costs of private car use were to be met by car users themselves. In the 8 years since this calculation was made these indirect costs have risen substantially. For example, the cost of road traffic related injury and deaths was estimated to be £5 billion in 1992. By 2003 this had increased to £16.9 billion. In reality it is cyclists who are subsidising motor vehicle use!

Motor vehicle licence duty is partially based on the impact vehicles have on the roads system and the environment. Heavy H.G.V.’s that damage the road surface pay more than cars and cars that emit exceptionally high levels of CO2 pay more than those which emit lower levels of pollution. Cycles have an almost immeasurable small impact in terms of road wear and have zero impact on the environment, consequently it is not possible to tax cycle uses by taking such factors into account.

In addition to the purely economic and environmental benefits to be gained from greater levels of cycle usage a reduction in the dependence on the car has many social and personal benefits that are harder to quantify but just as significant. For example, the economic costings associated with motor vehicle crashes do not take into account the long terms personal grief such events create. Similarly the quality of life is improved by virtue of there simply being less cars on the road be it because children can be allowed to play in the streets or because town centres are more pleasant to move around in.

The positive benefits for the environment, the economy and society at large are so great that it would make economic sense to pay cyclists to use their bikes. Some progressive employers recognise this (especially health authorities) and correspondingly pay cyclists a higher mileage rate than they do the users of motor vehicles.

The great majority of cyclists actually do pay motor vehicle licence duty as they also own cars but choose to travel by cycle instead to the general benefit of society and other road users. (For example, a cyclist is highly unlikely to kill or injure another road users whilst a driver may well do so).

Where cycle specific facilities are provided the typical amount of money spent on building and maintaining them is so low that a typical cyclist would have to pay a tax of less than 20p per year to cover the costs. This is obviously uneconomic to collect.

The VAT collected on bicycle sales outweighs the amount spent on facilities for cyclists many times over.
Society can only operate on the basis that all must contribute to facilities even if they do not use specific facilities themselves. Drivers who resent cyclists being provided with cycle lanes are they are not directly taxed for them are taking a similar stance to an individual who has no children resenting paying income tax as some of this is used on education. In reality as cyclists contribute to general taxation they will be subsidising facilities used by others to a far greater degree than the cost of cycle facilities. (This is particularly the case with the NHS as cyclists have better levels of general health and lower levels of heart disease and so put a much lower burden on the health system).

Calculating the true cost of car use.

Various calculation of the cost of car use on society above that raised by taxation have been made in the past. For example, Whitelegg in ‘Traffic Congestion; is there a way out? (1992) calculated that motorists pay only 27% of the cost car use imposes on society, with the total annual subsidy being £1000 per car per year. The CTC’s report ‘Costing the benefits: The value of cycling’ (1992) took figures provides by bodies such as the DoT, AA and CBI to calculate the total cost of car use in the UK to be £34 Billion, again well in excess of income from car and fuel taxation at that time. (This was prior to the introduction of the fuel tax escalator by the old Tories in 1993, in turn abolished by the new Tories in 2001). However, these figures are now well out of date with some going back to 1986. For example, in the report for the CTC deaths and injuries were costed at £4.8 billion per year whilst more recent DfT figures show the cost to be over £16 billion per year.

More recent figures from the Friends of the Earth put the total ‘environmental’ cost of car use at £43 billion a year as against £24 billion raised in taxation. However, such a figure includes some hard to quantify factors. Further, how far should we go in our calculations? The impact on house prices of having a busy road nearby? The costs of new sea defences to cope with rising sea levels due to global warming? The coast of fighting a war in order to secure oil supplies so as to keep cars on the road? In any case how are the human costs of cars to be calculated such as the fear of traffic or the restriction of the freedom of children?

This led me to look up some more up to date figures to see just how much car use is currently subsidised through general taxation, focusing on easily quantifiable costs rather then more ‘social’ costs such as the impact of traffic on the individuals quality of life.

One document of interest is the European Scrutiny Committee’s 24th report for 2002-2003 ‘The taxation of fuel in the European Union’ available at http://www.parliament.uk/index.cfm

This is primarily concerned with proposals to harmonise fuel duty in the EU. However, it does note that the calculated environmental cost of driving a car on London street is around £1.90 km or £3.08 mile. Given a fuel cost of £3.80 gallon of which 72% is tax (including VAT) or £2.74, at 30 MPG the driver is paying only 9p mile or only 3% of the true total ‘external’ cost. (OK at a lower MPG the driver pays a little more but then the level of pollution is higher too).

The report refers to other reports done by the Commission for Integrated Transport that argue that the vehicle licence and a proportion of fuel duty should be replaced by congestion charging, designed to reflects the high external costs of driving in our cities. (See http://www.cfit.gov.uk/reports/index.htm for more). Such a move would seem to make a lot of sense and as Ken Livingstone has shown, can work well.

Another interesting report is the Health and Safety Executives ‘Reducing at-work road traffic incidents’ (2003). This notes that the cost of road accidents in Great Britain in 1999 in human terms was 3,423 people were killed, 39,122 seriously injured and 277,765 slightly injured, with there also being 3.5 million damage only crashes. The financial cost of these deaths and injuries, as calculated by the DTLR was £16.3 billion.

See http://www.hse.gov.uk/roadsafety/report.htm

Now, according to Government figures there are about 32 million registered car drivers and 25 million licenced cars, with another 1.7 million unlicenced cars on the road. Fuel duty raises around £24 billion per year. Obviously the cost of road deaths and injuries at over £16 billion a year makes quite a dent in this on its own…

As has been in the news recently, another quantifiable cost of car use relates to the fact the car dependent who live a sedentary lifestyle place a high burden on the health service due to the high rates of diseases such as heart disease, diabetes, certain forms of cancer and so on which they are prone to.

I haven’t seen any UK based figures on this but a report called ‘Cost-benefit analyses of walking & cycling track networks in Norwegian cities’ by Kjartan Saelensminde and published by the Institute of Transport Economics, Oslo, 2002 does look at this and a number of other ‘external’ costs of car use.

In this report, in order not to overstate the benefits of a less car dependent lifestyle, the author assumes only 50% of people would benefit from a more active lifestyle. He also only costs for 4 diseases related to inactivity. On this assumption he calculates that, on average, every driver who becomes moderately active by walking or cycling saves the Norwegian economy an average of £605 per year. (Or an average of £1210 for those for who a ‘prescription for exercise’ works and nothing for those who still require treatment). See

http://www.toi.no/toi_Data/Attachments/887/sum_567_02.pdf

Home http://www.vti.se/nordic/2-02mapp/contents.htm

We already know that UK cyclists are much less likely to suffer a range of diseases then habitual car drivers. We also know that there is plenty of opportunity for motorists to cycle instead of driving. Half of all car journeys are less then 3 miles in length and so could be easily cycled as part of an active lifestyle (as they are in Holland, Denmark, Germany…)

Given the UK has 31.7 Million licence holders, and the fact that the UK is just about the least active country in Europe, if we also assume that just 50% of those would benefit from a more active lifestyle, our £605 per head gives a total avoidable cost to the health service due to ill-health related to car-dependency of £9.6 billion pounds per year. It might be suggested that not all drivers are in a position to cycle or walk more. However in Holland 67% of the population are ‘regular’ cyclists… Next time you are sat in an emergency department for hours after being knocked off your bike wondering where all the NHS’s money goes, now you know…

Saelensmind states (converting for the £) ‘A physically inactive person who starts to walk or bike to work instead of using car or public transport, gives an economic benefit to the society of £1,800 to £2,370, according to the analysis. If the person is physically active prior to the change from motorised transport to walking or cycling, the benefit is £327 to £900 a year.’

Currently a driver doing 10,000 miles a year at 35 MPG pays about £780 in fuel duty and VAT and pays a vehicle licence of say £140 year giving a total of just £920. (And unlike many continental motorists UK drivers don’t pay for using motorways). (I am not arguing for the total accuracy of my figures, but I do think they are indicative).

So, taking just the costs of dealing with ‘accidental’ road killings and injuries and the cost of treating lardy arsed drivers for expensive and largely avoidable ailments such as heart disease, it is apparent that the costs of these alone uses up the revenue raised by ‘road tax’ and fuel duty. Oh, and someone still has to pay for the roads. That’ll be us habitual cyclists and walkers who need less expensive NHS care and don’t run down and kill or maim people…

Author: Cris Bloomfield

Usually mountain biking in the North.

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