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Car tax changes 'of limited benefit' POLITICS.

Byline: By Peter Woodman

The proposed changes in car tax rates have been "poorly explained and communicated" and do not go far enough, a report by MPs said today.

The projected carbon savings from the introduction of new vehicle excise duty (VED) bands were "far less than they could be", the report from the House of Commons Environmental Audit Committee stated.

The report added: "We are surprised that the Treasury has risked provoking such political opposition for an environmental measure which, according to its projections, is of limited benefit."

The committee was also disappointed "that the Treasury had not calculated what the impacts of the (VED) Budget (changes) will be on emissions from second-hand cars, when this was one of the main objectives of the changes".

MPs said a failure to advertise green tax details to the public "breeds suspicion about their objectives, increasing the perception of them as revenue-raising measures with no environmental purpose".

The Treasury should pay more attention to communicating the details and objectives of VED and other environmental taxes in the future, and should examine the case for a more ambitious reform of VED, the report added.

The committee was looking at the whole question of VED following the announcement in this year's Budget that VED rates were to rise for existing cars with higher emissions registered since 2001. The committee said that attention had since focused on the 1.1 million high-carbon cars, registered between 2001 and 2006, that will see their VED more than double, from pounds 210 to pounds 430 or more.

The MPs said they strongly supported the Treasury's use of VED as an environmental tax and welcomed the changes announced in the Budget.

But their report said: "However, we are seriously concerned that even the projected differentials between VED bands remain too small to be effective and, in consequence, the projected carbon savings are far less than they could be.

"We also believe that both the proposed changes in VED rates and the objectives of VED as an environmental tax, have been poorly explained and communicated."

MPs also said that the Treasury should consider a "car scrappage scheme" to offer drivers of high-emission cars a payment to trade in their vehicles for more efficient models.

The MPs said they agreed with the Treasury that new VED bands for cars bought since 2001 was not retrospective taxation and that there was "nothing intrinsically unfair or unusual" about it.

But the committee said there were real concerns over the financial effects of raising car tax on existing vehicles owned by lower income households, although it noted there was a lack of hard evidence on how many will be disadvantaged by these changes.

The committee welcomed the so-called "showroom tax" - a series of new, first-year rates of VED - higher than standard rates for high-emissions cars, lower for low-emission cars.

In calling for a more-ambitious reform of VED, the MPs said that this might enable the Government to offer bigger tax discounts for low-emissions vehicles, as well as leading to higher carbon savings.

The committee also called for the Government to accelerate the development of new vehicle technology, improve public transport, and encourage car-sharing schemes.

The committee's chairman Tim Yeo (Con: South Suffolk) said: "The changes to car tax announced in the Budget are a step in the right direction. Raising the rates on high-emissions cars that are already on the road could encourage sales of more efficient models in the second-hand market.

"Meanwhile, the first-year rates being introduced for new cars will create a kind of 'showroom tax' that could be used to influence buyers of new cars to choose the most efficient model in each class."

He added: "However, the differentials between high and low carbon cars are still nothing like wide enough to make a big impact in practice. According to the Government's own figures, these changes will only have a very limited impact on the environment.

"The Treasury must be more ambitious, matching increased charges on high-carbon cars with discounts or rebates on low-emissions vehicles. The Treasury must also urgently work to ensure these changes are not unfair to vulnerable groups."

Friends of the Earth transport campaigner Tony Bosworth said: "We're delighted that the committee believes that the Government's car tax changes are right in principle and that they have urged the Treasury to consider our suggestion of a car scrappage scheme.

"Three times more second-hand cars are bought each year than new ones, so upping VED on old polluting vehicles will encourage people to choose greener models, cut fuel bills and lower carbon dioxide emissions. Paying people to scrap their old gas-guzzler and replace it with a cleaner car will make this cheaper and easier to do."

The green drive

Drivers are growing "greener" in their choice of car but price and performance are still the key considerations when buying, a survey today shows.

As many as 87 per cent reckon the most important aspect to consider when buying a new car is price, the poll by website and magazine Auto Trader reveals.

The next most important thing was performance, followed by safety and fuel consumption.

Only 45 per cent considered a vehicle's carbon dioxide emissions an important aspect while only 26 per cent were concerned about the use of environmentally-friendly materials to make the car.

But the survey of 3,300 UK motorists also found that 20 per cent of motorists were considering buying a hybrid for their next vehicle and a quarter were thinking about a biofuel-capable car.

Only 20 per cent said they would definitely not buy a hybrid, while 17 per cent would not buy a biofuel-capable car no matter what the price.

The poll also shows that 43 per cent of motorists were likely or very likely to ensure their next vehicle had lower CO2 emissions than their current car

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Attention has focused on the 1.1 million high-carbon cars, registered between 2001 and 2006, that will see their VED more than double, from pounds 210 to pounds 430 or more
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Publication:The Birmingham Post (England)
Date:Aug 4, 2008
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