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Vehicle duty charges to be revised

Thursday, 8 January 2015

The Department of Infrastructure is seeking to revise the charging structure for vehicle excise duty in the Isle of Man.

Minister Phil Gawne MHK will ask Members to support the introduction of the Vehicle Duty Order 2014 at the January sitting of Tynwald.

The proposed changes were first announced by the Department in October 2014 as part of a package of measures drawn up in response to its challenging budget target.

Subject to Tynwald approval, the revisions to vehicle excise duty will result in an overall increase in revenue of 10% on cars and 4% on motorcycles, generating an additional £800,000. Duty for the majority of other types of vehicles will remain unchanged, while vintage vehicles (pre-1987) will continue to be charged at a rate of £15.

The new charging regime is aimed at achieving three main outcomes –

  • To secure additional funding to help the Department to maintain the Isle of Man’s roads
  • To rectify existing disparities between fees based on engine capacity and those based on carbon emissions
  • To encourage people to buy more fuel efficient vehicles

Duty is calculated on engine size (cubic capacity) or on carbon emissions depending on the year a vehicle was first registered.

The Department is proposing to amend the charging structure by splitting the lowest carbon emissions band into three and bringing those fees more into line with the equivalent engine capacity bands.

The changes will also address the current disparity that sees the owners of older, larger engine vehicles paying significantly lower duty than the owners of newer, less polluting models.

Minister Gawne said: ‘Vehicle duty has become increasingly complex in recent years with the introduction of emissions-based charging and concessions for older cars. The Vehicle Duty Order 2014 will correct the anomalies in rates, while seeking to minimise the impact on the majority of vehicle owners. The intention is also to secure more funds to invest in our roads network and to promote the use of more fuel efficient vehicles that do less harm to the environment.’

He added:

‘This is one of the initiatives being progressed by the Department to help the Isle of Man Government rebalance its finances. Significant cost savings have been achieved, but in order to maintain frontline services we need to secure additional revenue from the users of those services. While recognising this proposal will have a financial impact on motorists, it will create a much fairer system overall.’

A recent review of expenditure on roads shows the UK Treasury collects about 25% more per mile of highway in vehicle excise duty than the Isle of Man Government, £24,000 per mile compared with £18,000. The UK also spends more on highway maintenance, £33,000 per mile compared with £23,000 per mile in the Isle of Man.

Currently, the total income from vehicle duty in the Isle of Man is £12.5 million and the estimated cost of maintaining the road network in 2015-16 is more than £16 million.

Minister Gawne said:

‘The Department invests a lot of its resources in the upkeep and safety of our roads. It is part of our commitment to providing the foundations on which others can build economic and social success. Figures show that we don’t collect enough in vehicle duty to meet the cost of highway maintenance, so the revenue from these changes will provide much needed additional funding.’

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