'In the March 1998 Budget the Chancellor announced he would be considering the case for replacing the existing business mileage discounts with discounts for driving fewer private miles in company cars; the Government is considering the wide range of responses received so far,' said the response to The Royal Commission on Environmental Pollution's 20th Report.
But the Government has shied away from the Royal Commission's suggestion that the future benefit-in-kind tax regime of company cars should be based on their fuel consumption. Instead, it signalled its hostility to company car drivers receiving free fuel for private motoring, saying this offers little incentive to reduce their private mileage.
'The Government considers it is important to send consistent signals about the need to reduce unnecessary journeys and improve fuel efficiency,' said the response. 'It therefore announced in the March 1998 Budget that the scale of charges for employees provided with free fuel for private use will increase by 20% each year over and above normal increases up to 2002/3 to discourage employers from providing free fuel.'