A new 60-page report from The Ashden Trust, London First and University of Westminster - entitled Company Car Taxation: A Contribution to the Debate - commissioned in response to public and business concerns about the impact that the current company car taxation system has on the environment, on car ownership and car use, says the current tax system encourages company car drivers to use their vehicles more often and should be changed.
The report calculates that business mileage accounts for 35 billion miles annually of which 60-70% is clocked up in company cars. However, it claims the current mileage discounts for breaking through the 2,500 or 18,000 mile tax breaks could falsely inflate annual mileage by 5%. Evidence suggests about 60% of the distortion arises from additional business mileage which adds about one billion miles with the remainder being either mis-declaration of private mileage as business mileage or invented mileage.
THE report says the two areas of distortion in the current system arise from reductions for higher business mileage and the flat rate charge on free fuel. In addition, it says, stronger signals are required to encourage more efficient company cars.
As a result the report - 'Company Car Taxation: A Contribution to the Debate' - recommends:
In a statement, the steering group - whose members include London Transport, London Electricity, J Sainsbury, BAA Heathrow, Lex Service, Ashurst Morris Crisp NatWest Group, Coopers & Lybrand, British Airways and Arjo Wiggins Appleton - said: 'This report brings together the concerns of both business and environmental interest groups on the effects of company car taxation on driving behaviour. Through a combination of anecdotal and statistical research, the findings provide evidence for the need to review the current taxation system. We hope that the Government will give serious consideration to the recommendations.'
Company Car Taxation: A Contribution to the Debate by The Ashden Trust, London First and The University of Westminster is available from The Ashden Trust on 0171 439 7177 or London First on 0171 222 1445.