Fleet News

Cleaner cars hit by unfair VED increase

A NEW rate for vehicle excise duty (VED) introduced this month has penalised fleets which use cleaner cars, politicians were told during a debate in the House of Commons.

It was claimed during a session on the Finance Bill that the move announced by Chancellor of the Exchequer Gordon Brown to increase the charge by £5 in this year's Budget unfairly affects lower emission vehicles because they are paying the largest percentage increase in tax.

Treasury shadow minister Stephen O'Brien said: 'The vehicle excise duty on cars and vans increased by £5, which represents the revalorisation rounded to the nearest £5. The increase impacts on lower capacity vehicles and lower emission cars by a larger percentage.'

For petrol fleet cars that produce CO2 emissions of between 121g/km and 150g/km the cost has increased 5% from £100 to £105.

But for the most polluting petrol fleet vehicles, that produce CO2 emissions of 186g/km and above, the £5 increase from £155 to £160 represents a rise of just 3.2%.

O'Brien added: 'Not only are both increases above inflation – a fact no doubt noted by drivers up and down the land – but the £5 increase penalises cleaner cars to a greater extent.'

The MP added that he supported the Government's aim of providing incentives to buy less polluting cars but claimed the £5 increase 'runs contrary to that need'. He invited Chancellor of the Exchequer Gordon Brown to accept one way of resolving the problem was to 'round down the figure'.

In reply, Economic Secretary John Healey said: 'The clause also introduces a new lower triple-A VED band for the least polluting cars – those with carbon dioxide emissions of 100g/km or less. Motorists with cars in that band will be able to pay up to £110 less than motorists who pay the highest rate of VED. That further improves the incentives to choose less polluting cars.'

But only a couple of hundred drivers will benefit from this low rate.

Healey added: 'The structure for VED is not designed to reflect current purchasing decisions and choices. It is designed to build incentives for the longer term and to encourage more people to buy and use more fuel-efficient cars in the longer term.'

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