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2013-06-18 12:13

'A CRAZY TAX SITUATION': CAP's Mark Norman believes it's ludicrous to scrap serviceable cars for the sake of a tax discs. Image: Hyundai

LONDON, England - Higher annual vehicle licence fees could force thousands of perfectly roadworthy cars registered as recently as March 2006 off the roads and on to scrapheaps.

The UK government's idea is to get older, perceived to be atmospherically dirtier, cars off the road to meet "green" requirements but others say exactly the opposite will happen.

A study by UK vehicle running-costs analyst CAP Automotive says the annual registration tax on vehicles only seven years old is now around a third of their sale value and that the problem stems from changes to vehicle excise duty (read tax) bands introduced in 2006 to penalise higher CO2 emissions vehicles.


It means cars first registered in March 2006 with CO2 emissions ranging from 226-255g/km will now cost the equivalent of R7336 a year to tax; those that emit more than 255g/km will cost R7568 a year.

According to CAP, the danger is that such cars could rapidly become worthless to trade, even though "they cause relatively less pollution because older, less economical, vehicles tend to be driven less".

In South Africa passenger vehicles are taxed a once-off fee of R75-R90 for every gram/km of CO2 emissions above 120 and in the case of double-cab bakkies R100-R125g/km in excess of 175g/km. According to Ford SA, this means a 2013 Fiesta 1.4 Trend (130g/km) retailing for R189 900 has an environmental tax of R1620.

SA’s licence renewal fee is based on a vehicle's weight but differs by province. Gauteng's annual licence for a vehicle weighing 1000-1250kg is R312, a licence for the same vehicle in the Western Cape costs R334.

CAP believes that lowering licence fees for the top two CO2 brackets after a certain age would prevent the scrapping of well-maintained vehicles with many years of life remaining.


CAP's Mark Norman said: “We are now in the crazy situation where perfectly good cars have become uneconomical to own because the cost of taxing them could soon approach half their value. This means more and more cars will become unsalable and will have to be scrapped long before the end of their useful life.

“Scrapping serviceable cars for the sake of a tax disc makes a mockery of environmental taxes as owners already tend to limit their mileage because the cars are relatively uneconomical. Throw in the carbon footprint of building cars to replace those that are scrapped and the environmental justification for taxing these cars off the road collapses.

“The (UK) government should now consider lowering annual tax rates for cars that fall into the brackets L and M after a certain age. This would prevent this potential waste of vehicles that do relatively little harm to the environment but provide cheap and comfortable transport for thousands of hard-pressed drivers in austerity Britain.”


Below are examples of seven-year-old cars which are becoming uneconomical to tax. The vehicles were first registered in June 2006 and all have 112 000km on the clock.

We list CAP's trade value in value and what percentage the tax is compared to overall value of the car (eg. model - CO2 - trade in value - percentage of vehicle's value) .

The vehicles are all taxed at R7336.

Renault Laguna 3.0 V6 (237g/km) - £1375 - 34.55%
Citroen C5 V.6 (238g/km) - £1425 - 33.33%
Fiat Croma 2.2 16V (229g/km) - £1450 - 32.76%
Hyundai Sonata 3.3 V6 (241g/km) - £1525 - 31.15%
Peugeot 407 3.0 V6 (233g/km) - £1675 - 28.36%


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