Safe Speed Forums

Despite the strange metropolitan belief that motoring is a luxury of the wealthy, car ownership is widespread amongst low income groups outside of central London. Nearly half (46 per cent) of individuals in the bottom income quintile own a car, rising to 68 per cent for pensioners and couples with children (Office of Fair Trading, 2010: 73). This is lower than the rate in countries such as France and the USA, and it is significantly lower than the rate amongst the rest of the UK population (81 per cent), but it not low enough to justify being neglected by anti-poverty campaigners.

The benefits to the poor of having access to a car were spelt out by the Office of Fair Trading in a 2010 report: ‘Without access to adequate means of transportation, the poor are at risk of facing social exclusion, as they are unable to access food shopping, financial, leisure, health and education facilities that are not within walking distance. In addition, for car owners the marginal cost of a journey can be less than half the cost of public transport. This is particularly significant for family travel.

In 2011/12, duty on petrol and diesel was 58p per litre and prices at the pump averaged £1.33 and £1.41 respectively. The bottom quintile spent an average of £244.50 on motor fuel duty, excluding VAT, which amounts to 8.1 litres per week. The total annual cost of this petrol and diesel, including fuel duty, VAT and the product itself, amounts to £578 per household.

This cost is not spread evenly throughout the quintile, however, but is paid only by those who own a vehicle. 54 per cent of the poorest quintile do not own a vehicle and therefore pay no fuel duty. It is the remaining 46 per cent who pay, on average, £1,257 each - 11.1 per cent of their disposable income. On average, these drivers buy 18 litres of petrol or diesel per week.

In total, 61 per cent of the cost of a £1.33 litre of petrol, and 58 per cent of a £1.41 litre of diesel, is made up of duty and VAT (AA, 2011). Of the £1,257 that low income drivers spend on fuel per annum, £748 goes straight to the government in duty and VAT. These taxes amount to 6.6 per cent of their disposable household income. Vehicle excise duty relieves them of a further 1.6 per cent of their income (an average of £185 per annum). Motoring taxes therefore cost them 8.2 per cent of their annual household income.

...A flat rate tax like fuel duty is fair to everyone. The more you drive, the more you pay.

Only up to a point, I think. The poorest motorists tend not to run the latest, most fuel-efficient cars (because they can't afford them). I therefore think that the poorer (say) 25% of the motoring spectrum spend a much greater percentage of their income on running their cars than the top 25%. I certainly don't think Vehicle Excise Duty is a big enough percentage of the cost of car ownership to make a significant difference to choice of car.

Another way of looking at it might be that the top 25% probably run bigger cars which generally use more fuel. They therefore pay more tax. So, it's the careful middle class with their newish fuel efficient cars who are "getting away with it".

I generally agree about VED but, in the limit, the poorest may chance it and have none whatever car they have and if you have no tax you probably have no insurance either.