Tomorrow we see the raise in VAT to 20%, I have an idea that could help reduce our Governments costs and tackle an increasing problem at the same time:

I have a bee in my bonnet about road tax for our cars. I'm not saying that we should not have to pay this tax, I just feel the way in which it is collected is old fashioned and ineffective.

You may be aware that in the Budget of 2008 the chancellor updated the different road fund license charges based on CO2 omissions by volume, so the gas guzzlers pay more and the really efficient vehicles pay less. I think it's a reasonably well balanced form of increasing taxation whilst trying to offer those with a conscience and a desire to help the environment a tax advantage. However the amount of civil servants it takes to continually update and keep abreast of the regular changes in this policy, coupled with the cost of collecting is, in my opinion, a waste of tax payers' pounds.

My idea would be to scrap road tax all together and instead simply increase the taxation on fuel. This has benefits all round; for starters all those tax dodgers cannot get away from contributing by illegally driving without road tax, or even worse with a fraudulently printed one. They, like the rest of us, have to visit the petrol station and fill up if they are to use their vehicles, so no more road tax fraud, no more expensive prosecutions or diverting police funds to target this area of deceit.

Secondly, if you own a car that does 15 miles to the gallon compared with a car that does 70 miles to the gallon you automatically pay more tax because you have to buy more fuel, this in itself creates the same incentive to become more environmentally friendly as we all like to save money.

The Chancellor still has the ability to adjust at will the amount of tax pounds we all pay as he does with the road fund license, but the collection process is easy and already in existence; there is therefore no need for a costly implementation program.

I am not professing to know all the details regarding exactly what could be saved, but if you liken the way we operate this system to any cost process within your business it is not difficult to see that very large savings indeed are available if this out-dated method of tax collection is simplified. Of course there is a down side; along the way collection of this money creates employment, but in 2010 do we really need to create employment via such ineffective methods. Look around you, modernisation is constantly taking place and if, like me, you are in business you will have witnessed many changes introduced by this Government, some of which have been beneficial, and others which have been less effective than they would be if introduced with a modicum of common sense. Today the Prime Minister announced future pay restraints for the public sector and spoke of the need to pull together in order to work through this tough economic climate and help reduce our debt burden.

I can see that running the country, especially in such difficult times, is challenging, but I often wonder if they ever look at things from a simple common sense point of view, and feel if they did we would all be so much better off.

Do you think I am barking mad or do you agree with me?

If you have witnessed any taxation that you feel could be handled in a better way, or would like to comment on my blog post please feel free.

DNB