Low-income drivers punished by car tax rules as experts denounce ‘poverty premium’


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The University of Manchester report shows that low-income households drive 40 percent fewer kilometers than those in the higher income bracket. Households with an annual income of less than £ 18,125 drive fewer miles, make fewer trips and do not buy newer, more efficient cars.

Despite this evidence, car tax is still charged at a flat rate, which means lower income households end up paying for richer households to use the roads.

Because of the current flat rate of auto tax, that means six million low-income drivers pay more than 212% more per mile for their auto tax than the wealthiest drivers.

When the driving habits of low-income and high-income households were compared, the analysis shows that driving distance, frequency and affordability are the main differentials.

Low-income drivers have much less of an impact on UK roads, traveling 40 percent less kilometers and doing 17 percent fewer trips than those in the higher income bracket.

READ MORE: ULEZ car tax change hailed as most drivers reconsider vehicle options

Additionally, drivers from low-income households are less likely to be able to afford more efficient cars such as electric or hybrid models, with just 22% of this group paying the cheapest tax brackets.

As a result of this research, auto insurance company By Miles is calling for urgent auto tax reform.

They are calling on the government to implement a new per-kilometer car tax system that is based on usage and translates into a cheaper car tax for low-mileage drivers.

James Blackham, CEO of By Miles, urged the government to implement new measures to protect low-income drivers.

He said: “Low income drivers in the UK face a triple challenge at the hands of our current car tax system.

“Despite driving shorter distances less often and the cost of more efficient vehicles, these households are used to subsidize the driving behaviors of much richer households.

“It is not controversial to suggest that those who use the roads the most should shoulder a greater share of the burden when it comes to paying for them.

“We urge the government to take a fairer approach to reducing kilometers traveled, by charging and taxing motorists for the kilometers they actually drive and by rewarding those who drive less.

“We believe that a new model would not only save most drivers money, but also encourage and reward people to reduce their emissions, however we choose to travel.

These changes would encourage everyone to drive less, while reducing emissions and helping to build a fairer and greener future for all road users.

Dr Diego Perez Ruiz, author of the University of Manchester Department of Social Statistics report, said: “This new analysis clearly shows that low-income households pay a ‘poverty premium’ to use their cars.

“Any future reform of the vehicle excise tax system should pay particular attention to this and aim to alleviate the disproportionate burden on the poorest families. “

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Julio V. Miller

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