The likelihood that the Chancellor will amend company car tax in the 2008 Budget has edged closer to reality.

Professor Julia King, the influential chair of the King Review, indicated that her forthcoming policy advisory report will recommend that the tax should be changed to further incentivise the adoption of efficient vehicle technology.

The second part of the King Review will be used by the Chancellor to form policy decisions aimed at cutting CO2 emissions from transport in the Budget.

“We must give the right economic signals and encouragement,” Prof King said. “We need to give a strong signal to fleet participants to go for low CO2 technology.”

She said getting the fleet industry to adopt low-carbon vehicles is critical in order to achieve the rapid introduction of these cleaner vehicles into the national parc – something that is essential if the Government’s target of a 60% reduction in CO2 emissions is to be achieved by 2050.

“Fifty-five per cent of new cars go into the fleet industry so a policy that encourages fleets to acquire more low-carbon vehicles will accelerate the pull through of new technology.”

However, she advised that her recommendations would not be all about incentivising. “I believe in a carrot and stick approach.”