UK Government Review Proposes Tax Increase For Polluting Vehicles

by Jason Gorringe, Tax-News.com, London

13 November 2007

According to a report in the UK's Times newspaper this week, proposals have been put forward by a government commissioned review to introduce the equivalent of a GBP1,000 penalty on high emission cars, in an attempt to reduce the damage from vehicles to the environment.

It is thought that steps will be taken to increase the cost of buying and running cars which produce high levels of carbon emissions, through the introduction of higher levels of excise tax, and the imposition of a purchase tax on such vehicles. It is hoped that consequently, motorists will opt for 'greener' methods of transportation.

It has also been reported that a reward scheme may be put in place, offering drivers who do choose to drive more environmentally friendly cars special grants.

Professor Julia King, vice-chancellor of Aston University, who heads the review, has reportedly suggested that cars powered by rechargeable electric batteries are likely to prove the most effective option for reducing the level of environmental damage caused by vehicles in the UK.

Talking to the Times earlier this week, Professor King observed that:

"We need both carrots and sticks. We are very focused on how we get results quickly. CO2 saved now is better than CO2 saved in 15 years time."

She went on to add that:

“In choosing cars, price is top of the list. Levels of increases of GBP1,000 to GBP1,500 seem to have a big effect on consumer behaviour. If there is a strong signal that there is only one direction we are going in — and that is lower CO2 — that will change behaviour. It’s got to be simple. The more complex it is, the more loopholes there will be.”

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