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, 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 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.

The British system was based on the RAC horsepower rating which was calculated from total piston area only. To minimise tax rating British designers developed engines of a given swept volume (capacity) with very long stroke and low piston area, a custom which continued long after taxation ceased to be based on piston area.

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

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 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 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).