Katy, I think we may be talking at cross-purposes and there are in fact several issues here.
At the moment we have a free market and in theory tax-sharing info (for income etc tax) but in fact it is a long way from being properly implemented and there are plenty of people who are using this fact to avoid paying tax in either jurisdiction – which is actually a criminal offence were they caught and makes the tax burden much higher for the rest of us.
There are tens of thousands of untaxed and uninsured UK registered cars and it is hard enough for the authorities to get on top of that with the cars that are actually in the UK – the Spanish police are very unlikely to be reporting those that are living here to Swansea. They have presumably decided that the best way that they can control it is to insist on an MOT issued in the UK for renewing the road fund tax for a UK registered car, and that cars which spend more than 6 months in any country should be registered and taxed in that country. Otherwise it would be anarchy, thousands of hours of police time would be lost across the whole EU and an important revenue stream would be lost. The system protects us all both economically and physically (by keeping unroadworthy vehicles off the road).
If we accept that democratically elected governments have the right and indeed the obligation to raise taxes in order to pay for public services, then in a democracy we all have to abide with the systems that these people, voted in by a majority, have decided to use to collect this money. If we don’t like it we can demonstrate our disapproval at the ballot box and if our chosen party does not win or does not implement changes we think are necessary then we are at liberty to abide by the wish of the majority or find somewhere else to live.
Under present conditions we are not required to jump through any hoops unless we want to flout this system, which 99.9% of the population do not seem to find to be any inconvenience. Also, if we comply with it, as mentioned in my previous post, it costs less in terms of road fund tax and MOT – and even insurance nowadays which was not the case in the past. I am sure that in the fullness of time there will be some Europe-wide recognition system and this problem will go away, but it is probably not at the top of anyone’e priority agenda right now as it will involve all creating a uniform road fund tax system (otherwise everyone will be registering their cars wherever it is cheapest to do so) and I am sure a lot of other complications. Not likely that they are going to do this any time soon in order to satisfy a small number of people who are no longer liable to pay their income tax to Mr Darling!