# Tax horsepower

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The tax horsepower or taxable horsepower was an early system by which taxation rates for automobiles were reckoned in some European countries, such as Britain, Belgium, Germany, France, and Italy; some US states like Illinois charged license plate purchase and renewal fees for passenger automobiles based on taxable horsepower. The tax horsepower rating was computed not from actual engine power but by a simple mathematical formula based on cylinder dimensions. At the beginning of the twentieth century tax power was reasonably close to real power; as the internal combustion engine developed, real power became larger than nominal taxable power by a factor of ten or more.

## BritainEdit

The so-called RAC horse-power formula was concocted in 1910 by the RAC at the invitation of the British government[1]. The British RAC horsepower rating was calculated from total piston surface area (i.e. "bore" only). To minimise tax ratings British designers developed engines of a given swept volume (capacity) with very long stroke and low piston surface area: British cars and cars in other countries applying the same approach to automobile taxation continued to feature these long thin cylinders in their engine blocks even in the 1950s and 1960s, after auto-taxation had ceased to be based on piston diameters, partly because limited funds meant that investment in new models often involved new bodies while under the hood/bonnet engines lurked from earlier decades with only minor upgrades such as (typically) higher compression ratios as higher octane fuels slowly returned to European service stations.

The RAC (British) formula for calculating tax horsepower:

$RAC h.p. = {D^2 * n}/2.5 \,$
where
D is the diameter (or bore) of the cylinder in inches
n is the number of cylinders [2]

The increasing discrepancy between tax horse-power and actual horsepower, along with some of the other distortive effects on engine design, led to the approach becoming discredited and the British government abandoned it in the 1940s[1].

## Continental EuropeEdit

Although tax horsepower was computed on a similar basis in several other European countries during the two or three decades before the Second World War, continental cylinder dimensions were already quoted in millimeters, reflecting the metric measurement system. As a result of roundings when converting the formula between the two measurement systems, a British tax horse-power unit ended up being worth 1.014 continental tax horse-power units[1].

## FranceEdit

French-made vehicles after the Second World War in particular have had very small engines relative to vehicle size. The very small Citroën 2CV for example has a 425 cc two cylinder engine that weighs only 100 pounds (45 kg), and at the opposite extreme, the large Citroën SM has a still modest 2,700 cc six cylinder engine that weighs only 300 pounds (140 kg).

In France, fiscal horsepower survives. However, in 1958 it was redefined: the formula became more complicated but now it took account of cylinder stroke and of cylinder bore, so that there was no longer any fiscal advantage in producing engines with thin cylinders. The dirigiste approach of French government nevetheless continued to encourage manufacturers to build cars with small engines, and French motorists to buy them. The 1958 French fiscal horsepower formula also took account of engine speed, measured in rpm. The government modified the fiscal horsepower formula again in 1978 and in 1998. Understandably French cars are no longer so regularly defined even on their domestic market in terms of their (tax) horse-power. Since 1998 "real" horse-power measured in kW has replaced a notional figure based on cylinder dimensions and an additional value has been added based on carbon-dioxide emissions.

## SpainEdit

Fiscal horsepower also lives on in Spain, but is defined simply in terms of overall engine capacity. It therefore encourages small efficient engines, but does not influence the ratio of cylinder bore to stroke. The current Spanish definition does, however, add a factor that varies in order to favour four-stroke engines over two-stroke engines.

## Impact on engine design and on auto-industry developmentEdit

The fiscal benefits of reduced cylinder diameters (bore) in favor of longer cylinders (stroke) may have been a factor in encouraging the proliferation of relatively small six cylinder engined models appearing in Europe in the 1930s, as the market began to open up for faster middle-weight models[1]. The system clearly perpetuated side valve engines in countries where the taxation system encouraged these engine designs, and delayed the adoption of ohv engines because the small cylinder diameter reduced the space available for overhead valves and the lengthy combustion chamber in any case reduced their potential for improving combustion efficiency.

Another effect was to make it very expensive to run cars imported from countries where there was no fiscal incentive to minimise cylinder diameters: this may have limited car imports from the USA to Europe during a period when western governments were employing naked protectionist policies in response to economic depression, and thereby encouraged US auto-makers wishing to exploit the European auto-markets to set up their own dedicated subsidiary plants in the larger European markets.

Taxation can modify incentives and tax horsepower is no exception. Large capacity (displacement) engines are penalized, so engineers working where engine capacity is taxed are encouraged to minimize capacity. This rarely happened in the USA, where license plate fees, even adjusted for horsepower ratings, were comparatively much lower than European car taxes.

## Naming and classification of individual car modelsEdit

The tax horsepower rating was often used as the car model name. For example, the Morris Eight got its name from its horsepower rating of eight; not from the number of cylinders of the engine. The Citroën 2CV (French deux chevaux [fiscaux], two tax horsepowers) was the car that kept such a name for the longest time.

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