Fleet News

Still no end to diesel taxation distortion

We are very disappointed that the Government has not removed the 3% Benefit-in-Kind taxation surcharge that diesel cars are currently faced with.

We have long campaigned for this distortion to be removed – the improvement in diesel technologies has left this charge looking very dated.

There is no longer any justifiable reason that diesel cars should be penalised by an extra 3%, when in fact they are very low carbon emitters and modern technologies have done much to remove or reduce particulates.

However, the government’s decision to maintain the 3% diesel surcharge within the company car tax regime is a discriminatory tax against diesel fuel, is totally out-of-date and really needs to be abolished.

There is a major anomaly here in that diesel cars emit the lowest levels of carbon dioxide, a major contributor to global warming, yet companies and their drivers are penalised for selecting the less-polluting option. It really makes no sense at all.

And the particulate argument holds no water either, as the introduction of diesel particulate filters on a widescale basis on the latest generation models goes a long way to ensuring the removal of harmful particulates from exhaust emissions.

While we are disappointed at the continuance of the diesel tax surcharge for diesel cars, we warmly welcome the abolition of fuel escalator and the removal of the 1p increase in fuel duty, which took many pundits by surprise in the Budget.

The Government has clearly rethought its plans for fuel duty against a backdrop of rising fuel costs and VAT increases which are a considerable fiscal drag on the economic recovery.

The changes announced will be applauded by many businesses, although it remains to be seen whether they will pump-prime the economy in quite the way that the Chancellor says he thinks they will.

Author: Martin Brown, managing director, Fleet Alliance

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