THE motor vehicle “road fund” tax in this country at the time of writing is levied on a flat-rate basis irrespective of engine power, rated or otherwise. The horsepower tax is a thing of the past. Not quite though! Although the graded h.p. tax was changed to a flat-rate tax in 1953 (then £12 10s. a year), a curious anomaly remained, i.e., cars of under 6 h.p. R.A.C. rating and of 6-7 h.p. under this h.p. assessment, registered on or before January 1st, 1947, were stilt taxed on these h.p. ratings.
It would be extremely interesting to know how the mind of the Civil Servants responsible worked, to permit this curious distinction. Perhaps an expert on economics or social science will be able to explain?
The horse-power tax was imposed initially in 1910, on a sliding scale ranging from 2 gns. to £42 per annum, the criterion being the R.A.C. horse-power formula. In 1921, for the brave new post-Armistice World, the Government simplified this to £1 per R.A.C. h.p. This was reduced to 15s. per h.p. in 1935, rose to 25s. per h.p. in 1940.
By 1947 the powers-that-were had at last been persuaded that the outdated h.p. rating was restricting the development of British power units, by encouraging small bore-dimensions and thus long-stroke engines of limited piston speed. They changed the taxation basis to engine capacity, at the rate of £1 per 100 c.c. However, as it was obvious that the new short-stroke high-speed engines would be very much more powerful than the old longstroke engines, the h.p. tax was retained for cars registered before January 1st, 1947. I do not recall whether this remained at 25s. per R.A.C. h.p. or was raised. But it was logical to assume that if a new 2-litre car had to pay £20, it would be fair to charge the owner of, say, a vintage 3-litre Bentley the same amount, and a vintage 2-litre Lagonda owner £16 5s.
Once before, the authorities had appreciated that engine development had meant greater power from a given engine size and had introduced a tax rebate on engines made before 1915, but this was swept away with the flat-rate tax. However, the system of imposing different types of taxation, on pre- and post-1946 cars, was cumbersome and involved complication on application forms and confusion in the tax offices, so the following year a flat rate of £10 was levied on all post-1946 cars. This was a step in the right direction and in 1953 a further simplification was achieved by charging all cars the flat-rate tax of £12 10s., raised to £15 in 1961 and to £17 10s. by the recent Socialist Budget.
This is where the aforesaid fascinating anomaly arises—cars of up to 6 h.p. rating were still taxed under the archaic R.A.C. formula and so were cars of 6-7 h.p. Why? This was a sop to small-car users and possibly intended as a vote-catcher. But if so, it was directed at a remarkably small minority of car owners. The Austin 7, which the authorities may have had in mind, went out of production before the war, and the baby cars of 1953 were all rated at 8 h.p. or over. (Even in the summer of 1927, in the hey-day of the h.p. rating, only nine 6-h.p. and 937 7-h.p. were registered, compared to 6,450 of 8-h.p. rating.) Could it be that someone in Whitehall wanted to appease these baby car owners and assumed they were all of Austin 7 size and that the “7” represented the taxable h.p.? (In fact, even the original Austin 7, of 54-mm. bore, was rated at 7.2 R.A.C. h.p.) But if so, why the two exceptions to the flat-rate tax, of under-6 h.p., and 6-7 h.p.?
In any case the Austin 7 had a 56-mm.-bore engine, rated at 7.8 h.p. and, as the Government, with typical grab-grab instincts, had long ago insisted that 0.1 h.p. or over counted as a whole and was to be charged as another £1, even the humble pre-war 747-c.c. Austin missed this odd tax concession and in 1953 had to pay £12 10s. So if this was the car singled out for financial aid, the authorities were wide of the mark!
When I was an Austin 7 owner, I used to ponder on how I could take advantage of the tax concession! It seemed that one could get a free rebore by linering-down the engine to qualify for the under-6-h.p. tax-rate. Unfortunately this meant not only paying for the liners but having special pistons made, as no standard ones were sufficiently small, which would not only have cost more than the money saved on the licence but, as the liners would have to be fairly thick, might have introduced overheating and distortion problems into the bargain. Reluctantly, this Boddy-economy had to be abandoned. . . .
When the recent Budget again raised the flat-rate tax I assumed the authorities would take the opportunity of killing these inexplicable concessions. Not a bit of it! Cars registered before January 1st, 1947, and of under 6, or 6-7 R.A.C. h.p. rating still receive this fascinating concession. Although the rates have gone up, from £10 15s. and £12 10s. respectively, to £12 10s. in both instances (electric cars formerly charged £9 a year also now pay £12 10s.), this concession saves a fiver a year for owners of certain single- and 2-cylinder veterans, the earlier flat-twin Jowetts, the 7/12 and 7/17 Peugeots, the very smallest pre-war D.K.W.s if any remain, and half-a-handful of obscure small cars possibly long since extinct even in V.S.C.C. circles. I should be sad to see it repealed. But, please can someone tell me why it was introduced and for what reason it is retained in 1965?—W. B.