Fleet News

Green tax will see company car costs soar

THE cost of running company cars could rocket under new proposals for environmental taxation as residuals plummet, road charging targets high-mileage drivers and fuel prices are kept high.

A leaked memo to chancellor Gordon Brown from environment secretary David Milliband reveals suggestions to raise motoring charges across the board as Brown prepares for his pre-budget report. Milliband said he was keen to ‘maintain pressure on the cost of motoring’.

Transport taxes would include a dramatic rise on vehicle excise duty for the most polluting vehicles, and fuel prices that stay constant regardless of the price of oil.

Drops would mean more money for the government as it skims off the difference, despite no change in the price at the pump.

The move follows claims from treasury chief secretary Stephen Timms that company car tax will double its current emissions savings over the next three years from a quarter of a million tonnes to half a million tonnes of CO2.

A Treasury spokesman said those predictions reflected more low-carbon cars available and ‘more people getting the message’, and said there were no plans for further company car tax changes.

The raft of environmental taxes is being proposed because the government is so pleased with the results of the changes to company car tax – one of the first of its emission-based levies.

Penal VED rates for higher-emitting cars are the next target, but a spokesman for residual values experts CAP said higher charges would certainly impact on residual values.

‘There are suggestions that such measures might also reduce demand for larger vehicles such as 4x4s and lead to changes in the shape of the market overall,’ he said.

‘If the government chose to target older cars in particular, as the typically biggest polluters, this would potentially stimulate demand for newer vehicles.’

But more new cars could lead to lower used prices as they flood back on the market.

Stewart Whyte, managing director of industry consultancy Fleet Audits, said: ‘We can’t underestimate the green problem, but the motorist can’t be the only cash cow for the Government.’

Whyte said Milliband’s letter should be taken seriously only in terms of being another piece of evidence towards government plans to tax the motorist.

‘The details of Milliband’s ideas are unworkable, particularly in terms of fuel pricing. It’s all empty talk,’ he added.

With regard to road pricing, Whyte said business drivers would not abandon their cars for public transport unless buses and trains were more attractive to travel in, regardless of financial penalties.

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