Fleet News

Brown warned over 'highway robbery'

FLEET industry leaders have called for Chancellor of the Exchequer Gordon Brown to stop using company car drivers as a 'cash cow' as he prepares to present his pre-Budget statement to Parliament on Wednesday.

The call is intended to influence Brown as he may announce an extension of the carbon dioxide-based company car tax system past its current three-year lifespan by setting out the future of the tax until 2008.

Drivers currently pay tax on a percentage of the car's list price according to its carbon dioxide emissions, starting from 15% for 165g/km and rising 1% for every full 5g/km increase in emissions.

However, next year the bands change so a car needs to produce 155g/km to qualify for the lowest band, effectively increasing tax for most drivers. The bands drop again for 2004/05 to start at 145g/km.

There is growing expectation this policy will continue, potentially adding hundreds of pounds to some company car drivers' tax bills over the next six years.

For example, a driver in a petrol-engined car producing 170 grammes of CO2 per kilometre pays tax on 16% of his car's value this year. This could rocket to 26% of the car's value by 2008, a 62% increase.

Fleet industry leaders are demanding a signal that fleet drivers are not treated as an easy way to collect taxes.

Roger Glenwright, of the John Lewis Partnership, claimed that company car tax had degenerated into something little short of highway robbery.

He said: 'Company car tax has trebled in the past 10 years and has no relation to the benefit employees receive from driving a company car.'

Nigel Underdown, director of marketing at Godfrey Davis Contract Hire, argued that the Chancellor of the Exchequer must stop penalising 'the good guys' by taxing company cars heavily, and should concentrate on using tax to rid the country of old, high polluting vehicles.

He said: 'The vast majority of company car drivers are on three-to-four year replacement cycles, and are not able to swap to a lower-emission car every year. It is inevitable that most will always be behind the game in technology terms. Would it not be more sensible for the Treasury to turn its attention to some of the more elderly, high emission vehicles in private ownership and tax these into extinction?'

A spokesman for the Society of Motor Manufacturers and Traders added: 'We have seen changes in car taxation going through a phase where people are adjusting to it. It will take up to 18 months for it to settle down and the true picture to become clear.

'No other industry has done so much to improve its environmental impact, and we ask that any changes are sensible, sensitive, balanced and do not just penalise company car drivers.'

The exact details of readjustment in tax bands is unlikely to be announced until the April 2003 Budget, a Treasury spokesperson said, but fleet industry figures want to see a show of support from Government next week.

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