It's a hard one
You don't pay road tax is really easy to say and really hard to argue against in the small situation time you have.
Even if you decide to take any of the tacks, you are kind of on hiding to nothing
"I have 2 cars" is a decentish comeback in the short term as it puts the argument back at them even if it technically we all know that paying road tax is not the issue here. I don't own a car so really I can't use this one, they don't know that but I feel it's a cheap answer, you certainly wouldn't use it in a debate that wasn't happening in the few seconds till the lights change.
The "road tax doesn't exist argument, it's VED etc etc" is too conceptually difficult to argue and wishy washy.
"The paying road tax doesn't give you the right to endanger me" one always seem to lead to the I wasn't too close / I didn't hit you / You are being a drama queen defence.
Essentially the road tax argument is a perfect riposte, it's pretty much the Chewbacca defence of bad driving, even the if the driver is using it with a straight face.