The Government and the DVLA have been criticised for not doing enough to combat road tax evasion, which is costing hundreds of millions of pounds each year.
Edward Leigh, chairman of the House of Commons Committee of Public Accounts, said: 'The Department for Transport (DfT) and the DVLA are losing ground in their fight against VED evasion, and the DVLA's performance in tackling persistent evaders of road tax has been poor.'
The evasion rate jumped from 3.6% in 2005-6 to 5% in 2006-7, which now represents a cost of 214 million a year.
Motorcycle VED evasion rife
The DVLA was deeply criticised, particularly for failing to do enough on road tax evasion among motorcyclists.
'Nearly 40% of motorcycles are now unlicenced,' said Leigh. 'If the DVLA's enforcement regime is not to be a complete laughing stock, then the agency and the department must make the most of new powers to enforce VED off public roads - and strongly consider more severe measures such as impounding unlicenced motorcycles.'
DVLA and DfT 'must work harder'
The committee also said that the DVLA and the DfT must work more with the police and local authorities to tackle offenders on the road, rather than just using paper records. It also said that using new technology to detect evaders should be 'vigorously pursued'.
'The alternative is an ever-increasing belief among road users that the evasion of road tax is a low-risk priority,' Leigh said.
There was also a call to close a loophole which means that motorists who delay renewing their road tax could avoid paying one month's worth of road tax without being sent a penalty notice. 'This loophole should never have been allowed to exist,' said Leigh.
Reaction to the Committee's findings
Sheila Ranger of the RAC Foundation said: 'VED evasion isn't just about money. Motorists driving without tax are also more likely to be driving without insurance and an MoT certificate. Responsible motorists aren't just picking up the tab for evaders, they are also being put at risk by them.'
She also added: 'Enforcing only from the computer record increases the risk of people dropping out of the system completely and joining the motoring underclass.
'The Government needs to boost the number of traffic police carrying out on-the-road crackdowns, so that the motoring underclass and hard-core tax dodgers are the ones feeling the pressure, not the law-abiding motorist.