Chancellor Rachel Reeves is reportedly considering a significant tax change for the private hire vehicle sector as part of her upcoming Autumn Budget, a move that industry specialists warn could have severe consequences.
Potential Impact on Fares and Competition
The key proposal under speculation is the application of Value Added Tax (VAT) to private hire vehicle fares. This would effectively add an extra 20% to the cost of a journey for customers. David Sweeney, head of taxi broking at The Taxi Insurer, has voiced strong concerns about this potential policy.
"If VAT is added to PHV fares, there's a danger it'll make the drivers of those vehicles less competitive," Sweeney stated. He further explained that such a hike in fares could push customers away from using these essential services and towards public transport options instead.
Survey Reveals Drastic Consumer Reaction
Data from an industry group survey paints a stark picture of how the public would react to a so-called 'taxi tax'. The findings indicate that 70 per cent of Brits would reduce their use of taxi and private hire services if prices increased.
Breaking down the figures further, the survey revealed that over a quarter of respondents rely on cabs for their weekly shop. An additional 15 per cent use them for medical appointments, highlighting the service's role in essential travel. Alarmingly, 12 per cent said they would stop using these vehicles entirely if the tax was introduced.
A Deeply Unpopular Move for Regular Users
The potential VAT raid is set to be deeply unpopular with a significant portion of the population. The survey confirmed that a third of respondents use a taxi at least once a week, making them frequent users of the service.
Furthermore, almost a quarter of those surveyed admitted they would slightly reduce the number of private hire journeys they make. With the Autumn Budget scheduled for November 26, the industry and its customers await the Chancellor's official announcement with apprehension, fearing a decision that could further challenge an already tough market.
