Fears have been raised that the number of tax-dodgers could surge from next month when motorists no longer need to display tax discs on their vehicles.
The RAC warns that there may soon be as many people dodging car tax as there are drivers without car insurance , which could cost the UK economy £167 million every year.
RAC chief engineer David Bizley said: "We could be looking at around £167 million of lost revenues to the Treasury, far exceeding the £10 million that will be saved by no longer having to print tax discs and post them to vehicle owners."
Drivers will still have to pay car tax from October 1 but no longer need to display the disc on their windscreen. Instead, officers can now check electronically whether drivers have paid their taxes.
Another change coming into effect on the same day is that tax can no longer be transferred from one owner to the next - which means that people buying a used car will have to renew the tax straight away.
A recent survey by the RAC found that more than a third of drivers (36%) did not know about the changes coming into effect, and just under half (47%) did not know when they would come into effect.
Nearly two in three (63%) believe that scrapping the paper disc could lead to more untaxed cars on the road, and more than four in 10 (44%) said the changes will encourage drivers to break the law.
Mr Bizley said: "There is clearly concern among motorists over the issue of enforcement. Most of the changes make sense and will benefit the motorist, but too many motorists are unaware of the detail. The big question has to be whether enforcement using only cameras and automatic number plate recognition will be sufficiently effective.
"Although there is a network of fixed Automatic Number Plate Recognition (ANPR) cameras in urban areas and on motorways and trunk roads, there are inevitably fewer in rural areas. And, whilst police officers have the ability to identify untaxed vehicles, they don't have the capacity to take on an additional workload.
"There are clearly many people who still believe that the humble tax disc is a simple yet highly effective way of ensuring all motorists pay their VED. As a result, there is real concern that without the need to display a disc, less scrupulous motorists will take a chance and try to evade payment. This already happens with insurance and adds an average of £33 to the premiums ofthe law-abiding majority who pay their insurance.
"If a similar number of drivers avoided paying car tax, we could be looking at around£167mof lost revenues to the Treasury, far exceeding the £10m that will be saved by no longer having to print tax discs and post them to vehicle owners.
"Motorists will therefore be looking to the DVLA for reassurance that the new rules will not give rise to a new generation of car tax-dodgers."
Copyright Press Association 2014
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