Brown proposes green car taxation

Proposals to reform vehicle excise duty (VED) to encourage cleaner cars were announced by Chancellor Gordon Brown on 3 November 1998.

The Treasury has published a consultation document seeking views on a new system to allow VED for the cleanest and smallest cars to be cut by 50 percent. The proposals include varying VED according to a car’s carbon dioxide emission rate, and its ability to meet progressively tighter EU standards for engine emissions.
Since the information to do this will only be available for new cars, Brown proposes to use engine size, and possibly age, as proxies, for existing cars. Fuel type (e.g. diesel or petrol) is another a factor which could also be taken into account.

Commenting on the proposals, Economic Secretary Patricia Hewitt, said “The present flat-rate duty structure offers no incentive for using a more environmentally-friendly car and our proposals aim to achieve that. By encouraging more fuel-efficient and cleaner cars, the proposals aim to address greenhouse gas emissions (which cause climate change) while also taking into account emissions of local air pollutants, which can damage health and make life in towns and cities unpleasant.

Britain is currently the only European country that does not vary its VED according to some aspect of the car. The new VED rates will be announced, as usual, by the Chancellor in his next Budget.

To see the full consultation paper, in Adobe Acrobat, follow the link below.

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