Fleet drivers are turning to diesel as a means of minimising the impact of the new emissions-based benefit-in-kind tax system. Fleet acquisition of diesels rose by 55% in the first quarter of 2002.
But their migration to these lower emission cars could be threatened by a toughening of Government policy following the publication of a new report in Nature magazine, highlighting the contradictory environmental credentials of diesel-powered cars that perform strongly in terms of combating global warming, but poorly in terms of local pollution.
The research establishes a link between diesel fumes and both allergies and asthma. The findings were unveiled at the Experimental Biology 2002 meeting in New Orleans recently and can only cement official thinking that PM-10 particulate emissions in diesel exhaust gases are to blame for respiratory diseases.
Now scientists suggest the sooty specks release compounds in the lungs that make the immune system produce chemicals that cause inflammation. The particles also shut down a part of the immune system is normally fired up by bacterial and viral infection.
The combination of these two factors convert a normal immune response into an allergic reaction, according to Fred Finkelman of the University of Cincinnati. The immune system then overreacts to airborne proteins like pollen or dust mites and the result is a streaming nose, wheezing and shortness of breath, due to the overproduction of mucus and the contraction of airway muscles.
The new company car tax system already treats diesel cars differently to their petrol equivalents by imposing a three percentage point supplement on diesel because of its local pollutants.
However, by using the new tax system to incentivise cars with lower emissions of greenhouse gases, the Inland Revenue has created a regime that still heavily favours diesel cars.
Company car drivers are now taxed on a percentage of the price of their cars dictated by the vehicles' CO2 emissions, so with diesel models producing about 25% less CO2 per kilometre than their petrol equivalents, diesel cars incur substantially lower tax bills.
According to the Society of Motor Manufacturers and Traders: 'Fleet buyers in particular are making low CO2 emissions a top priority. More than 45% of new cars in last year's fleet market had a CO2 rating below 165g/km, the lowest tax threshold under the new company car tax rules.
'In total, cars registered to fleets averaged 175.5g/km CO2 in 2001.'
This means that 45% of company car drivers who changed cars last year will now pay benefit-in-kind tax based on 15% of the P11D price of their cars (the lowest tax threshold), or 18% if the cars are diesel and incur the 3% supplement.
Overall, the SMMT found that the average CO2 emissions of all fleet cars (petrol and diesel) bought last year was 175g/km, indicating that half the UK's new company cars will incur tax at or below 17% of P11D price.
Under the old business mileage-based company car tax system, about 30% of drivers paid tax at 15% of their cars' P11D values, and the remaining 70% of drivers paid at either the 25% or 35% thresholds.