The hidden cost of fuel-efficient cars

Yesterday’s drive of the new Fiesta ECOnetic got me thinking.

It’s astonishing what car makers can get out of a car these days. The new ECOnetic manages a combined figure of 76mpg. But it is still a proper sized car, with reasonable performance and capable of transporting the average family, and their stuff, in style. So that’s admirable, and quite an achievement. 76mpg. Takes some getting used to.

The way things are moving, particularly as motorists currently seem fixated on ‘Green’ cars (however flawed the whole ‘man-made global-warming’ argument is), it is likely that more and more people will be looking to cars like the ECOnetic. And why not? For every day use it is superb.

Electric Smart Car - Cheap to run, but how will governments replace the lost fuel tax revenue?

Perhaps we’ll even come to view big, powerful cars, with their mid-teens fuel consumption, as nothing more than toys for the weekend. In a way, just what the horse has become. Once the main-stay of transport, the horse was put out to grass (pun intended!) with the rise of the motor car. Instead, horses became a passion, a sometimes expensive passion for many, but they didn’t cease to be. Their place in society, and our lives, just changed.

But what will be the consequences of all these fuel-efficient cars? Well, if you buy the man-made global-warming myth, then we will save the planet (yeah, right!). But, on a more prosaic level, where will the money come from – the money lost from the big drop in revenue that the government will suffer if we all go ‘Eco’?

Fuel tax in the UK brings the treasury around £50 billion a year. The way things are going, we could easily see fuel usage drop by half in a very short period. Where does that £25 billion lost get recovered from? A rise in income tax, perhaps? Well, to get an extra £25 billion in that way, the basic rate of income tax would need to rise by 50%. Who will stand for that? But what’s the other option? Double fuel tax, so we all end up paying out what we did for fuel before we bought a super economical car? Doesn’t seem a very sustainable plan.

This whole Nanny-State thing, where government dictates what we should do and what we should think, has a whole hidden burden that doesn’t seem to be discussed. And fuel is just one issue. What about tobacco and alcohol? I’d be the first to say no one should smoke, but I’d also be the first to defend someone’s right to do so. Governments are seriously considering banning smoking, and in the meantime are doing all they can to manipulate people in to perceiving smoking as the act of the devil!

But tobacco tax brings in over £10 billion a year, only half of which is estimated to be spent on health care for smokers. And alcohol revenue brings in £14 billion a year. Halve that with the big push to stop people having a glass of wine in the evenings, quoting the completely made-up ‘Safe Limits’ as a reason, and tobacco and alcohol losses could easily top £12 billion. Add that to the loss on fuel if we keep going the same way, and you have a total of some £37 billion. Oh, and don’t forget to add in VAT on that lot. A total sum lost to the exchequer in the not too distant future of £42.5 billion a year. Which would mean doubling basic rate tax.

So, how to save us all from this? Easy. Buy a gas-guzzler, keep smoking and drink at least a bottle of good red a day. You may not live for ever, but you’ll have fun, and at least the lost years come off the arse end of your life!