Fleet News

MP fails to kill-off CO2-based tax

A RADICAL bid to kill-off CO2-based company car tax and abandon use of list prices in tax calculations has fallen at the first hurdle. Shadow Treasury spokesman Howard Flight introduced the amendments at a House of Commons Committee debating the Finance Bill.

Flight told the committee the tax should be based on a combination of business and private mileage, with higher private mileage equating to higher tax.

But Stephen Timms, Financial Secretary to the Treasury, said the system Flight suggested would be a 'nightmare' for fleet managers to implement and added: 'Existing arrangements provide incentives for people to drive extra miles they do not need to drive. The amendment would make matters worse, because drivers would have an incentive to drive extra business miles to reduce their tax.'

But Flight condemned CO2-based company car tax, claiming: 'The new arrangements will lead to either dishonesty or to problems for salesmen who are provided with cars and who genuinely use them for selling. It is wrong to tax such people at the same rate as would be used if their cars had been provided as perks. The Government should be aware that considerable ill will is caused by that proposal.'

Under proposals for CO2-based company car tax, high-mileage business-use drivers who currently cover more than 18,000 miles a year and are taxed at the lowest rate of 15% could in some cases see their tax liability double.

However, Flight withdrew the amendment, with a promise to introduce a more refined change later. He also called for current market value to be used for calculating tax, rather than list prices.

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