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Is the UK government’s stance on vehicle emissions flawed?
The government’s policy on Vehicle Excise Duty (VED) states that the more carbon dioxide a vehicle emits, the higher the taxation. The system is designed to discourage drivers from buying heavily polluting vehicles, and to encourage manufacturers to build more efficient models. However, the latest changes to the system, in the recent budget, exemplified the futility of the government’s current stance.
Vehicle Excise Duty
The 2003 budget saw a reduction in tax for the least polluting cars (AA bracket; £70 reduced to £55 for petrol) and a rise for the highest polluting vehicles (D bracket; £155 raised to £165 for petrol). It remains to be seen what effect this change will have, but it seems that to have the desired impact on the market the government should look towards the middle ground (B & C categories), not the extremes (AA & D categories).
Vehicles in the AA and D tax bands are in the minority at the moment in the UK in terms of sales, which is why the changes announced in the budget are likely to have little effect. An overwhelming 80% of the best selling cars in the UK in 2002 were in the mid-bands of B and C. From the top ten, only the Ford Mondeo was classified in the D bracket.
UK Best Sellers 2002*
The super-green Toyota Prius and Honda Insight, both AA-rating on carbon dioxide emissions, managed just 291 and 48 sales respectively. Both vehicles suffered from low supply and relatively high prices against performance (if not emissions) comparable cars, which contributed to the sales figures.
In relation to the 2002 sales figures, it becomes clear that change to the mid-bands would bring a more widespread change.
The VED system is of course just one way in which the government can influence the motor industry’s environmental performance. The sector is already heavily taxed across the board, so a dramatic overhaul of the VED system to increase impact could have serious repercussions. However, it should be seen as the minor device that it is, not elevated to become the government’s flagship green motoring policy.
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