A FRESH wave of confusion is set to hit the fleet industry with a Government admission that it is considering a radical new approach to company car tax for 2002 which would replace plans for a carbon dioxide-based tax regime. Government officials have so far referred specifically to a CO2-based tax, which includes a controversial 3% penalty for diesel vehicles.

But Fleet NewsNet can reveal that a much more radical scheme is also under development which takes into account a basket of emissions, including CO2, but also measures oxides of nitrogen, sulphur and particulates. Fleet managers would be able to give each of their company cars a pollution rating by using published figures for emissions to calculate a single figure for each vehicle. Importantly, the figures do not only take into account tail-pipe emissions, but the 'oil well-to-wheel' emissions of a vehicle.

Unlike the CO2-based regime, there would be no need for penalties for different fuels. Each pollutant, from particulates to NOx and CO2, would be given a different value in calculations to provide the single pollution rating figure. Pollutant values would be weighted according to their damage on the environment. As in the proposed CO2-based company car tax regime, a sliding scale of charges relating to the pollution rating would indicate the level of company car tax to be paid.

The system is the brainchild of Don Ridley, regional process industries regulations manager for the Environment Agency, who has approached the Inland Revenue with the idea of using the calculations as the basis for the new company car tax from 2002. Sara Woollard, Inland Revenue personal tax division policy adviser, who is co-ordinating the reform of company car tax, said: 'While it could be too complex to introduce in 2002, the suggested system will be kept under review. Furthermore, development of the tax regime for 2002 is still ongoing and the DETR is carrying out research to make the Agency's system less complicated.'