By Jonathan Davies

The new tax disc rules coming into effect could cost the UK £167m a year in tax evasion, according to the RAC.

The motorists' organisation said the rules, which will see motorists no longer required to display a paper tax disc, will lead to more people not paying their road tax at all.

The DVLA is introducing an electronic system from 1 October.

A survey conducted by the RAC showed that 36% of motorists were completely unaware of the changes with 47% aware of the changes, but not sure when they would take effect.

The RAC said 63% were worried about a rise in the number of untaxed cars on the road.

David Bizley, the RAC's chief engineer, said: "We could be looking at around £167m of 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."

But the DVLA dismissed the claims as "nonsense".

A DVLA spokesman said: "There is absolutely no basis to these figures and it is nonsense to suggest that getting rid of the tax disc will lead to an increase in vehicle tax evasion. We have a proven track record in making vehicle tax easy to pay but hard to avoid, with over 99% of all vehicles taxed."

Oliver Morley, chief executive of the DVLA, likened the new system to the TV License. Of course, people aren't required to display their license in the window, but it is still monitored electronically.

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