DVLA revenue falls £93m since paper tax disc scrapped

Friday, July 22, 2016


Since the abolition of the paper tax disc, the Driver and Vehicle Licensing Agency (DVLA) have seen their revenue fall by £93m in the last year, figures show.


According to information from the DVLA, revenue from vehicle excise duty (VED) fell from £6.023 billion in 2014/15 to £5.0930bn the year after.


The DVLA said: "As the last tax discs issued expired on 30 September 2015 it is likely that during the transitional period with customers becoming accustomed to the new tax changed that VED collection was affected.


"The agency has taken considerable steps to ensure that motorists are aware of the vehicle tax changes and have responded quickly where there have been issues.


"The withdrawal of the requirement to display a valid paper tax disc may well have contributed to the increase in non-compliance seen in the roadside survey given the correlation of these changes with a worsening of non-compliance rates.


"Instances of non-compliance highlighted in the roadside survey include instances of deliberate evasion, but also unintentional non-compliance which may have increased as motorists adjust to the new rules."


As a result of increased evasion, the RAC said that it was concerned that losses would continue to rise in the coming years. It called for roadside survey of unlicensed cars - a year earlier than one was due to be taken.


The RAC also stated that there could be other factors affecting the revenue loss, such as greater number of cheaper to tax low carbon emission cars being taxed.


But the RAC believes losses could continue to rise in the coming years due to the threat of increased evasion as the expire date is no longer visible in the windscreen.


Simon Williams, RAC spokesman, said: “It is worrying that the reduction in revenue from vehicle tax has exceeded the government's own estimate.


"Some may argue that a £93million loss is only £13million higher than expected, this represents an increase of £58million on the corresponding period before the tax disc was abandoned and far exceeds the £10million savings arising from no longer issuing tax discs."


However, a DVLA spokeswoman said: "We have introduced direct debit to help customers spread the cost of paying for their tax disc, and more than 10 million people have taken advantage of this, so there is a lag in when we receive the money.


"In addition, there are more clean cars on the road paying lower tax."


The DVLA adds: "While it is likely that the transition to new rules will have caused a temporary peak in non-compliance which will reduce as awareness improves, it is too early as this stage to draw a conclusion on whether the changes will result in a long term increase or decrease in non-compliance levels and level of VED ultimately collected."

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