[Closed] Could car tax be replaced with a slight increase in fuel tax?

Well, it could. But those of us with small economical vehicles that cost little to tax now, would be out of pocket.....

It's also a good way to check that you have insurance and an MOT.

Its a daft tax that bears no relation to the usage you have of the road. It should be use specific and therefore added to fuel tax. That makes it fair and gives an incentive to make vehicles more fuel efficient.

As for checking on MOT's and Insurance, thats done electronically via numberplate recognition cameras.

Its about time the govenment started joined up thinking, but I wont be holding my breath.

But small and economical vehicles use less fuel so you would pay proportionally less?

It seems to far in the future to want to include non petrol vehicles tho and these are exempt at the moment anyway are they not?

The checking for insurance & MOT was the only thing we could think of, a disc could still be mandatory though.

I think it's the obvious path to take. Everyone wins. Small, economical cars pay less tax on the fuel they use, big, thirsty cars pay more tax. It's tied to usage rather than a standarding charge. Look at it this way, when you cycle into work at the moment you still pay tax on your car sat on the drive, that's not fair is it?

No doubt the government will start taxing bananas and energy bars mind.

I think it's the obvious path to take. Everyone wins. Small, economical cars pay less tax on the fuel they use, big, thirsty cars pay more tax. It's tied to usage rather than a standarding charge. Look at it this way, when you cycle into work at the moment you still pay tax on your car sat on the drive, that's not fair is it?

No doubt the government will start taxing bananas and energy bars mind.

everyone wins apart from those who are forced to use cars by where they live. taxing fuel/pay per mile is incredibly discriminatory to those that do not have access to regular public transport and therefore have no choice but to drive.

ah hell, lets all just live in one big city, that'd be great.

Pre '72 vehicles still get a disc, as I assume do electrics etc, so no administrative reason. But I thought road tax was used for road maintenance and construction purposes- and if so it would be nearly impossible to remove cross subsidies and tax vehicles appropriately to the road damage and usage they cause.

Agree entirely. Taxing a car is such a hassle, imagine the admin cost savings too.

You didn't really think before you posted that, did you Peter?

😉

But small and economical vehicles use less fuel so you would pay proportionally less?

Yes, maybe, but still more than I do now!
And more economical vehicles already pay less tax.....

If it was worked so you paid the same then PP to calibrate the cost properly! 😀

I think PAYD tax and insurance would be good. I did the PAYD insurance that Norwich Union piloted and it was a real incentive to bike in and made me generally more thoughtful about when I used the car. It was a shame it didnt get enough take up imo.

my dads car is a 20 year old volvo that gets driven < 1000 miles per year. Taxing that 200 quid a year seems a bit silly. He only fills it up once every 3-4 months. Hire cars/public transport not really an option due to where he lives, though he does cycle a lot now.

VED also means a lot of otherwise roadworthy cars end up getting scrapped. Who wants too pay 400 quid a year on an old petrol audi a6? isn't it better to keep them running?

But I thought road tax was used for road maintenance and construction purposes- and if so it would be nearly impossible to remove cross subsidies and tax vehicles appropriately to the road damage and usage they cause.

All tax goes into a big pot; "Road tax" is no different. Most roads are paid for by local authorities, so it's Council tax if anything that goes 'directly' to the roads.

Taxing a car is such a hassle

It is? 😕

I recently paid the VED on our car. It probably took less than 3 minutes in total. I can just about handle that once a year.

Or were you being sarky?

If it was worked so you paid the same then PP to calibrate the cost properly!

If it was worked so I paid the same on one vehicle, then I'd pay more on another.

It doesn't work any better than the current system

Its a daft tax that bears no relation to the usage you have of the road

Using that rationale, what taxes are fair apart from VAT?

my dads car is a 20 year old volvo that gets driven < 1000 miles per year. Taxing that 200 quid a year seems a bit silly. He only fills it up once every 3-4 months

No, owning a car like that for such a low milage is the silly part. I'd bet you could take public transport or taxis for less then the cost of running that car.

Fuel is price inelastic, so small increases in duty will make no difference to consumption. It's also regressive as it hits everybody the same, regardless of their income.

By contrast, people are more sensitive to VED, because you have to pay it in one hit. So if it's considered desirable to have less polluting cars, VED is a useful instrument.

Oh, and VED isn't hypothecated for road maintenance. Most of it comes out of council tax.

Using that rationale, what taxes are fair apart from VAT?

I think petrol is not expensive enough anyway. So bring the cost up less car on the road. Everyone is a winner.

So bring the cost up less car on the road

you mean less poor people on the road.

the solution is not in taxation, it is in providing a viable alternative.

"everyone wins apart from those who are forced to use cars by where they live. taxing fuel/pay per mile is incredibly discriminatory to those that do not have access to regular public transport and therefore have no choice but to drive.
ah hell, lets all just live in one big city, that'd be great. "

I hate this argument and I dont want to live in one big city either (although I could see the arguments for it from a green perspective)

Look you choose to live where you live and if you didnt take into account the public transport system thats your fault. Public transport can only work with a system of hubs and people have to get to those hubs. You cant have public transport everywhere or it becomes uneconomical.

As for you paying for more this is probably very untrue. I bet your housing costs are considerably cheaper because you live away from public transport. I recently brought a house and paid a premium to be near a train station. You saved this initial outlay and may have to be paying it now in fuel.

Or to put it another way if you didnt have a car would you have chose to live where you live probably not.

my dads car is a 20 year old volvo that gets driven < 1000 miles per year.

Has he considered a car club scheme?

http://www.optionc.co.uk/
http://www.citycarclub.co.uk/

Obviously depends where he is, but could be a useful option.
£4 an hour (@15p a mile), or £36 for a full day, £12 overnight.

I don't get your counter argument either

you are aware that people work in the countryside aren't you, it's not just for people to commute into cities to work. I think you also need to distinguish between the countryside and the commuter belt.

You pay more to live near a station if you are in a commuter area, you clearly have a very odd perspective on countryside housing costs. Go and find an affordable house in Devon.

i take it from you counterargument that you live in and or work in or around London?

If as you say you choose to live in the countryside despite cost then who ends up living in the countryside?

Well To start with VAT is all BUT fair. As you pay the same price irrespective of your income.

What? So you think people on higher income, who already pay a higher rate of tax, should also pay more when they buy stuff?

Is the point of tax to make it ultimately pointless to earn a decent wage?

Well To start with VAT is all BUT fair. As you pay the same price irrespective of your income.

That was my point really. I responded to Trimix, who was saying that car tax is unfair, because everyone pays the same irrespective of usage.

I think it's the obvious path to take. Everyone wins. Small, economical cars pay less tax on the fuel they use, big, thirsty cars pay more tax. It's tied to usage rather than a standarding charge. Look at it this way, when you cycle into work at the moment you still pay tax on your car sat on the drive, that's not fair is it?

Classic reply from a city commuter 👿

I think petrol is not expensive enough anyway. So bring the cost up less car on the road. Everyone is a winner.

So you will be the happiest person when your shopping bills double and your bling bike parts treble in price ❓ 💡

VAT is all BUT fair. As you pay the same price irrespective of your income.

But if you paid more tax when you earned the money with which you pay the VAT...

Hear hear scu98rkr

the solution is not in taxation, it is in providing a viable alternative.

The only fair way to tax car usage, if the intention of the tax is to reduce usage, is on road charging. That way, people can be charged for driving when there are alternatives available, but not when there are not.

Or, have a tax on car ownership, which is tied to home postcode?

juan - the alternative is not public transport in all cases, i mean a viable alternative to fossil fuelled personal transport

Look at it this way, when you cycle into work at the moment you still pay tax on your car sat on the drive, that's not fair is it?

Yeah, I'm paying my council tax for my house and I'm at work. It ain't right I tells ya.

Look at it this way, when you cycle into work at the moment you still pay tax on your car sat on the drive, that's not fair is it?

I'm paying the road tax on my wife's car, which is sat at home not being used!

i mean a viable alternative to fossil fuelled personal transport

James martin anyone?

If you decide to live in the countryside you have to assume the consequences of it.
I wait 2hours a day commuting because I have choose to live in a village rather than in a city. but I don't complain as I have made this choice with (almost) full knowledge of what I would get.

"I don't get your counter argument either
you are aware that people work in the countryside aren't you, it's not just for people to commute into cities to work. I think you also need to distinguish between the countryside and the commuter belt.
You pay more to live near a station if you are in a commuter area, you clearly have a very odd perspective on countryside housing costs. Go and find an affordable house in Devon.
i take it from you counterargument that you live in and or work in or around London?
If as you say you choose to live in the countryside despite cost then who ends up living in the countryside? "

Hi Michael you have are right about where I work/live. But what are you suggesting you work as are you suggesting you work in multiple locations ? Like a farm vet or somethings. If your job demands traveling long distance then I agree there is little you can do about it.

But I still think my arguments will apply to rural, semi rural and urban areas.

Juan -

again with the commuting bollocks

do people not realise that NOT EVERYONE WHO LIVES IN THE COUNTRYSIDE WORKS IN A GOD DAMN CITY

scu -

I don't work in the countryside and i accept that it costs me more in commuting costs. Those who do work int he countryside do however need to shop/go to the bank/get to hospitals/go to the dentist in fact all the things that you can do by public transport in less rural areas. Cars are not just for work!

yes what do you work as ? we need to know, I still dont currently see how you cant live closer to work if you unless you work in multiple locations

I'd favour replacing car tax with a HUGE increase in fuel tax. Fuel needs to be three or four times the current price it is in order for us to have any serious impact on oil consumption and to make an impact on the forthcomming mess.

If fuel price quadrupled and consumption were to be halved, even then we still would be re only a small part of the way we need to go. 90% reduction in fossil energy is a hell of a task.

I'd vote immediately for any party which was going to dramatically raise fuel duties and spend the money on green energy. Shame there isn't one.

scu - i work in multiple locations, all over the world.

Your point being michael?
If you choose to live away from your work you have to assume the consequences. That is indeed irrelevant if you work in a city or in the countryside.
Mum live and work in the country side. But she does not want to live where she works, so she bites the bullet and pay the fuel tax.
Then if you are a taxi driver or have a job that involves lots of mileage there is little you can do but you will probably be able to claim the tax back anyway.

I'd favour replacing car tax with a HUGE increase in fuel tax.

That wouldn't be fair as it would just drive the poor off the road while letting the rich carry on.

If you want radical solutions then why not just give everyone a monthly car mileage ration based on their location, access to public transport and family size?

Unused mileage could be carried over to allow people to "save" for long drives and could be transferable to allow those taking the green option to sell on their mileage.

That should do it 😀

magic michael

again with the commuting bollocks

do people not realise that NOT EVERYONE WHO LIVES IN THE COUNTRYSIDE WORKS IN A GOD DAMN CITY

We are not all IT, lawyers, accountants, bank managers etc. Many people work or make their living from the land. Many live in the countryside not through choice but because that is maybe all they can afford in the way of housing, rented or otherwise. Many live there because that is what they were born into. I am a country boy(ageing one)but live just outside a small town.

City types just seem to be unable to grasp that not everyone wants to work in an office, they seem to be so blind to everything that happens outside their own little bubble.

Having said that I wish I had a pound for every city type who is jealous of my riding area 😉
I on the other hand would not swap any of you for your city jobs, bonuses, bling etc 🙄

A few people here seem to be getting upset if anyone challenges their 'right' to drive a car. Regardless of taxation changes and anything else I think the first thing 'we' need to address is public attitude to driving.

I think we have made the distinction now that not everyone drives into a city for work. However it is still your choice to not work in a city and rely on a car to drive to your place of work.

Back in the day there would be a doctor/ shopkeeper etc in the small rural viallges.. and the villagers would go to them so I suppose the out of town super centers and closing of local facilites and the like would have an impact now in terms of the distance rural people would need to travel day to day.

Most people who work in the city dont want to work in an office either I know I dont.

I dont see how this has got into a town v city debate. My point was that public transport cant be expected to work with out some kind of transport hubs. Therefore people who want to use it need to live near these hubs.

If your complaining that you NEED to drive to work. Then either work or you are located in the wrong place and if cars hadnt of existed either you or work would not currently be based where it is.

This is true of both cities and the countryside.

If cars didnt exist villages in the countryside would still be very important. Village shop schools etc would be busier as people would not be able to travel to town to buy food etc.

"scu - i work in multiple locations, all over the world. "

I not sure if this is a joke but if it isnt then surely you just need to live near an airport then you wouldnt need to drive so far.

That or company need to invest in video conferencing.

Like I said my comments dont really apply to jobs with multiple locations obviously these sort of jobs are going to require traveling and will be sensitive to fuel costs no matter what.

Increacing fuel tax wont realy make much difference to the ammount people use cars.

Ammerica - negligable fuel tax, costs about 20-25p a litre

UK - 350% fuel tax (ish) costs 105p a litre.

So im fairly sure it would take a monumental tax rise to have any impact.

And what about old inefficient cars? Should we all trade in our MG's for a prius, because that would be so good for the environment.......

Ironicaly the #1 cause for vehicles being scraped (scrapage may have changed this)? The ECU which supposedly makes them so good, fails and is uneconomical to replace. Average age for a scraped car, 7 years!

So I'd say we'd be much better keeping old cars on the road than doing anything to encourage the car industry to keep churning out disposable crap.

Saying that........ I'd be first inline to transplant tesla style engines and batteries into old sports cars 🙂

However it is still your choice to not work in a city and rely on a car to drive to your place of work.

you are still talking about driving to work, i am not talking about this. As i said above, there is much more to life than getting to and from work, many people in the countryside live in close proximity to the re place of work but not to other amenities. Not everyone lives in a village either. I completely agree that public transport cannot be all encompassing but by increasing the price of motoring irrespective of situation you simply drive those on lower incomes be they working or not into the cities and create a countryside full of the commuting middle classes.

Couple of points:

1. Fuel duty is not there to reduce emmissions, it is there to raise general taxation for the government. As already pointed out it would need to be significantly higher to actually seriously change driving habits. if that was the case then the lowest paid would be effectively priced off the road and no current political party would consdier that. So forget about it as a green tax, it isn't and never will be in the current political climate. Don't forget it was only earlier this year that the government removed the rule that prevented councils from setting up traffic lights to reduce congestion, instead they had to phase the lights to increase congestion (higher fuel usage and therefore tax). I'm not making this up [url= http://news.bbc.co.uk/1/hi/uk/7998182.stm ]link[/url].

2. They wanted to increase fuel duty to raise more money but got scared about the voters backlash after the fuel protests. This was why they started to witter on about their ridiculous satellite controlled road pricing scheme. Obviously this wasn't thought out as would cost billions to implement, millions to make administer and be dificult to enforce before any additional revenue is ever seen. Road pricing is a nice idea but prohibitively expensive, intrusive and arbitary.

3. Increased fuel duty is the obvious way to go. It's very difficult to avoid paying it (unless you have access to red diesel etc. which most people don't). It's cheap and easy to collect, no investment needed the network is already there and administered by private companies (fuel retailers). It hits the heaviest users of the road the most, you could design a better system for accurately charging road users based on their driving habits.

Drive a lot - more mliles more fuel more tax.
Drive badly (lots of acceleration / braking) more fuel use, more tax.
Drive a heavily loaded vehicle (causing more road damage) use more fuel, pay more tax.
Drive on congested roads at peaks times, use more fuel, pay more tax.

The beauty of all this is it already works, costs next to nothing to administer and is very difficult to fiddle. The only issue is the politicians are too scared to do it because of the implications in the opinion polls.

I don't set much store by lower paid people being taxed unfairly by this either. If that's the way we want to run things (a legitmate ideaology that I don't personally agree with) all tax should be an income tax, but then again no government has the balls to do that because it makes the total level of tax take far too apparent to the average voter.

The bottom line is that all taxes are a balancing act for the government of the day between how much money they can raise from the different taxation routes before the voters kick off. Concepts such as paying 'national insurance', 'green taxes' or for paying for what for the services you use, 'council tax' are all just governments propaganda for trying to justify each tax stream. All the money goes into central coffers to be spent on whichever policies or whims the current government is pursuing.

Sorry for the long post but it is something I have thought about quite a lot.

What you seem to be suggest is the general public subsidise you so you can live where you want ?

Its not "irrespective of situation" the more you drive the more you pay seems reasonable to me.

"lower incomes be they working or not into the cities and create a countryside full of the middle classes. " but this is true of many areas.

For instance my wife was born and grew up in a very nice village/town in Surrey. We could never afford to live where here parents live.

I come from Lichfield in Staffordshire and its probably only recently I could afford to move back there.

"As i said above, there is much more to life than getting to and from work, many people in the countryside live in close proximity to the re place of work but not to other amenities. Not everyone lives in a village either."

My other point is if the price of driving went up theses amenities would start to reppear in the countryside the local village shop would be profitable as people could nt buy food anywhere else etc etc

It would no longer make sense to live away from at least a village/hamlet but as far as I am aware historically this is what the countryside was likely people tended not to live on their own.

I don't set much store by lower paid people being taxed unfairly by this either. If that's the way we want to run things (a legitmate ideaology that I don't personally agree with) all tax should be an income tax, but then again no government has the balls to do that because it makes the total level of tax take far too apparent to the average voter.

Amen to that, [b]I don't ear any of your moaning about VAT which is way unfair to poor people.[/b] You want to pay less petrol tax, drive less. It might not be easy but it's certainly not impossible

Really? I've complained about it on these pages before. The fact remains that the poorest quintile in the UK pays the highest percentage of their disposable income in tax. Raising fuel duty will make this worse.

There are more equitable ways of constraining vehicle usage.

I don't ear any of your moaning about VAT which is way unfair to poor people.

I already answered you on that juan.

Higher earners already pay more tax as they earn, so why should they also pay more as they spend?

Raising fuel duty will make this worse.

Only if you drive...

Poor people drive less than rich people. Rich people will just pay the extra duty and carry on as they were.

Currently changing it for fuel tax would add about 10p/litre equiv for an average 12K miles/50mpg car. Thats a pretty damn hefty rise. But it would have the bonus effect of persuading more people to ride if possible, without changing the average persons wealth. While poor people currently drive less they may drive more as they'd be better off overall, but in reality they're less likely to see it that way and the extra would go on household expenses. Rich people will rarely care what you do, they'll pay whatever it costs to live as they want.

'The Rich' have been doing what they want throughout history, not really much anyone can do to prevent that (if anyone feels the need to of course).

Well to be fair I would much better pay half my salary in income taxes and have not VAT (expect on luxuries). Then you could increase fuel as well I'll just drive less. But half the money made by the "new tax" should be spend toward better public transport (and yes that means th gvt buying back railway...) and awarness toward cyclist.
Then for car that cost more than for example 9000£ you could have a road tax as well like a very big one.

The fact remains that the poorest quintile in the UK pays the highest percentage of their disposable income in tax.

What an incredibly crap statistic!

You're basically just saying that poor people have less disposable income than better off people.

What would happen if you fixed this so that the "poorest quintile" had more disposable income than the well off??

you can discuss it all you like but the facts are that both fuel duty and road tax will go up over time! neither will be replaced.

[i]I think petrol is not expensive enough anyway.[/i]

agreed entirely. £2 per litre sounds about right. Alternative forms of transport are available. But I guess most people knew this, it being a cycling website...

cheers
a country boy.

What stumpyjon said. I'd much prefer a few p per litre tax than a black box in my car linked by satellite to the government's mega-database (where are you driving today citizen?).

max - isn't that the situation we have now? more or less?

a small economical car doesn't pay much 'road tax' now anyway (about £50?). but there is lots of tax on fuel.

i'm really not jeremy clarkson, but i think cars are great, especially the freedom and oppurtunities they provide us with - why should we tax them so much?

think of this for a moment, i want to drive to scotland for a short break, while i'm there i will spend lots of money.

if fuel tax goes up too far, it'll be much cheaper to fly to spain for a short break, while i'm there i won't spend lots of money in scotland.

if fuel tax goes up even futher, i won't be able to afford to go anywhere, or do anything.

i fail to see how fuel tax has anything to do with saving polar bears.

I don't ear any of your moaning about VAT which is way unfair to poor people

In what way?!

Why should someone who pays more income tax on there earning also pay more VAT on what they spend? I would argue that VAT is the fairest tax as you are taxed on exactly what you spend. The more you spend, the more tax you pay, spend less, pay less tax, how is that unfair??? Why do people (not just on here) think that those who earn good amounts of money should be punished for doing so?

"Currently changing it for fuel tax would add about 10p/litre equiv for an average 12K miles/50mpg car. Thats a pretty damn hefty rise."

Do you reckon 10p a litre rise is pretty hefty? We saw more than that last year when oil prices went [s]down[/s], erm up and I'm not sure we really saw a big drop in usage. Went up tuppence a couple of weeks ago. Nobody hardly blinked.

What an incredibly crap statistic!

You're basically just saying that poor people have less disposable income than better off people.

What would happen if you fixed this so that the "poorest quintile" had more disposable income than the well off??

No, I'm saying that poor people lose a higher percentage of their income to tax, than rich people do. I didn't think it was a hard point to grasp.

If they had more disposable income than the well off, then they wouldn't be poor, now would they. 🙄

"The fact remains that the poorest quintile in the UK pays the highest percentage of their disposable income in tax."

Yeah, probably on cigarettes and alchopops......

Do you reckon 10p a litre rise is pretty hefty? We saw more than that last year when oil prices went down, erm up and I'm not sure we really saw a big drop in usage. Went up tuppence a couple of weeks ago. Nobody hardly blinked.

10% is pretty hefty. I saw ~8p rise and there were demonstrations in the streets last year. We saw a fairly hefty drop in fuel usage too, that was documented in the news. It went up tuppence two weeks ago here, then last week it went back down to pre-tax increase levels.

heres some actual real information:

Relevant bit is page 5

"Motoring taxation is made up of two elements, vehicle excise duty (VED), which can be considered a tax on ownership, and fuel duty, which is a tax on use."

No, I'm saying that poor people lose a higher percentage of their income to tax, than rich people do.

No you didn't, you said that poor people lose a higher percentage "of their [b][u]disposable[/u][/b] income in tax". That's a very big difference.

If they had more disposable income than the well off, then they wouldn't be poor, now would they.

That's right. The "well off" would become the "poorest quintile" and you'd be on here with exactly the same claim. 🙄

In what way?!

Now if you replace the VAT by an automatic income tax of 17.5% the first guy will pay 1050£ and the second will pay 210.

That sound much more fair to me 😉

"The fact remains that the poorest quintile in the UK pays the highest percentage of their disposable income in tax."

Quite right too, that's why they are poorer, generally speaking the poorer you are the more of your income goes on tax, food utilities etc. That's what a capitalist society is all about. The alternative is a communist style system and whilst theoretically a fantastic idea doesn't really work in the real world.

What we need is a sytem that rewards those whose skills are in demand [b]and[/b] people who are in demand because they work hard. A safety net should also be in place to help the small minority who are genuinely unable to help themseleves (effectively the welfare state in it's purest form).

Beyond that every surely everyone should effectively pay for what they use and in the case of driving surely that should be based on road usage which is dependant on the factors I outlined above. As for a tax on car ownership, how the hell is that fair or justifiable. You've probably already been taxed twice on that money, first through your income tax and then if it is a new car VAT (in fact you could argue you get taxed again to register it etc.). What justification is there for taxing you for just owning something, got a telly, lets tax it (bad example, they already do through the TV licence), better example. proposed million pound house tax, pure vote grabbing jealousy tax.

It's about time we faced up to the fact we don't live in the meritocracy we think we do.

But but but juan, under the current system the guy on £6000 a month has [u]already[/u] paid almost 10 times more in income tax than the guy on £1200.

The £6000 guy will pay £23,209 a year in income tax (32.2% of his pay)

The £1200 guy will pay £2,540 a year (17.6% of his pay)

ahwiles - I was asking if there was any reason car tax could not be replaced by increased fuel levy.

HoratioHufnagel - thanks that essentially answers it, ved is the tax on ownership. 🙂

month has already paid almost 10 times more in income tax than the guy on £1200.

Yes it's income taxes. Looks like you fail to understand how unfair VAT is.
Let say you ride bike (you probably don't as you post on here but lets admit that for the sake of the argument) with someone quite poorer than you are (I know sounds shocking but such peasant do ride bicycles).

Now imagine you both end up in the lbs buy the same product you need for your bike. Such product cost 100£ hence you both give the government 17.5£ of taxes. If we keep the salary figures ahead, you would have paid 0.29% of your income in taxes, the other guy will have paid 1.46% 5 times more than you.
Now due to the marvelous VAT system the poor guys is going to get taxed more than you.

Yes it's income taxes. Looks like you fail to understand how unfair VAT is.
Let say you ride bike (you probably don't as you post on here but lets admit that for the sake of the argument) with someone quite poorer than you are (I know sounds shocking but such peasant do ride bicycles).

Now imagine you both end up in the lbs buy the same product you need for your bike. Such product cost 100£ hence you both give the government 17.5£ of taxes. If we keep the salary figures ahead, you would have paid 0.29% of your income in taxes, the other guy will have paid 1.46% 5 times more than you.
Now due to the marvelous VAT system the poor guys is going to get taxed more than you.

But the rich guy had to earn more in the first place, to be left with £100 net pay.

And the 'rich' guy probably lives in a more expensive house, on which he'll pay more Council Tax...

[i]Classic reply from a city commuter[/i]

Guess again. It's a classic reply from someone who feels it's unfair to tax a car which is either sat on my driveway or sat in a private car park most of the time not being used.