New research found that the UK could raise almost £2 billion annually by taxing Sports Utility Vehicles (SUVs) more heavily. If carried through, this would leave the UK’s taxation policies much closer to those in a number of European countries. The recommendation comes as more and more evidence has raised alarms over the emissions and infrastructure damage larger vehicles have wreaked.
Swedish national Transport & Environment think tank and campaigners from the Swedish national organization are urging their government to levy the biggest vehicles. They’re fighting to make sure that we do what’s right and repair the damage these cars do to our environment and public infrastructure. Tim Dexter, the vehicles policy manager at T&E UK, went to bat for the measure, hard. He claimed that it would make a major contribution to addressing the UK’s £50 billion fiscal blackhole.
Cars are much bigger today than they used to be as consumer tastes tilted towards bigger vehicles and as advanced safety technologies have been built in. This change has fed a growing debate about whether we should tax SUVs. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, commented on this trend, stating, “Cars have, on average, increased in size over the years to reflect changing [consumer] preferences but the need to accommodate vastly increased safety technology – as well as, most recently, new technologies such as large battery packs to deliver the range drivers expect.”
Recent polling by YouGov found that a significant majority—about 60 percent—of UK car owners believe SUVs take up too much space. By comparison, fewer than 20% of them are opposed to such a perspective. This public opinion is a sign of a growing recognition of the dangers that come with the trend toward larger vehicles.
One of the reasons the UK’s vehicle tax system hits SUV owners less hard than their counterparts in other European countries. For 13 of those countries, the SUV acquisition taxes are at least triple that of the UK’s. In addition, seven EU member states have 0% tax on SUVs! A similar tax, recently proposed in the UK, would more than triple those costs. Some models—such as the Land Rover Defender—would face an extra cost of more than £10,000. In Britain, purchasing a new BMW X5 that costs £85,000 will incur a tax of £3,200. In France, that very same car batters you with a jaw dropping £66,600 tax.
Hawes believes that taxing larger vehicles makes fiscal sense given the potential new revenue from these taxes. Yet, he feels that this tax would disproportionately impact families and individuals who rely on such vehicles for their basic mobility. He stated, “Charging more for heavier cars would unfairly penalise drivers and families who require a bigger vehicle for essential mobility and act as another barrier to EV uptake when the market is already under immense pressure.”
In April 2023, the UK government revised vehicle excise duty rates. These changes were meant to ensure tax increases fell on cars that had the most emissions. UK buyers enjoy an “SUV loophole.” By doing this they can pay a lot less tax on their bigger models than their European rivals. The creation of a new, status quo-exceedingly popular tax would not only fill this substantial funding gap but align with broader environmental priorities.