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, like Britain, Germany, and France (where it is still used, and termed 'Puissance Fiscale') and certain US states, (such as Illinois), where license plate purchase and renewal fees for passenger automobiles were based on taxable horsepower.

The tax horsepower rating was based on a pure mathematical formula based on cylinder dimensions.

The British system was based on the RAC horsepower rating which only included total piston area. To optimise engine size and lower the tax rating, typical British cars developed engines of very long stroke and low cylinder area for a given swept volume. That tradition continued long after the tax horsepower was abolished.

The tax horsepower rating was often used as the car model name. The Citroën 2CV (French deux chevaux, two horses) was the car that kept such a name for the longest time.

At a very early stage the tax power was reasonably close to real power. As the development of the internal combustion engine continued, real power overtook the tax rating by a factor of ten or more.

Taxation can modify incentives and tax horsepower is no exception. Large engines are penalized, so engineers working under this regime are encouraged to make unusual efforts to minimize engine size. This had very little effect in the USA, where license plate fees, even adjusted for horsepower ratings, were comparatively much lower than European auto taxes.

French made vehicles after World War II in particular have had very small engines relative to vehicle size. The very small Citroën 2CV for example has a 425 cm³ two cylinder engine that weighs only 100 pounds, and at the opposite extreme, the large Citroën SM has a still modest 2,700 cm³ six cylinder engine that weighs only 300 pounds.

Interestingly, while a small engine does help fuel economy, vehicles with very small engines are not particularly economical, since the tiny engine has to work harder.