Fleet News

Budget 2007: largest increase in VED since 2002

GORDON Brown’s targeting of for 4x4s and other large engined vehicles in his hike in vehicle excise duty has masked disproportionate increases for many smaller car drivers.

For example, the alignment of petrol VED with diesel now means an economical 50mpg petrol Vauxhall Corsa 1.0 Expression sees an increase in the charge of £5 more than a £30,000+ Audi A4 diesel 3.0 TDi TDV Quattro S Line delivering 34 mpg and emitting 66% more carbon dioxide.

While much of the focus before and after the Budget concentrated on the new Band G charge of £300 for the highest polluting vehicles - rising to £400 in April next year - the real impact of this Budget is to raise additional revenue from the majority of drivers – regardless of the environmental impact of the cars they drive.

The additional cost in the road fund license for diesel cars was originally designed to penalise diesel cars because of their higher emissions of nitrous oxides (NOx) and particulates. Until this Budget, petrol VED was generally £10 less than that for diesel cars.

In removing the differential, by pushing petrol road fund licenses upward and into line with diesel, the Budget has effectively penalised millions of smaller petrol car drivers.

Mark Norman, CAP’s values services manager, said: ‘An increase of £15 in annual VED might not seem all that much but it is actually the largest increase in road fund licence duty for the average car since the new CO2 banded taxation was introduced in 2002.

‘At a time when politicians are constantly emphasising the importance of reducing Britain’s carbon footprint it seems ironic that the driver of a 50mpg car emitting 134 g/km of carbon dioxide will pay a greater increase for their road fund license than someone burning almost twice as much fuel over the same distance and pushing 223 grammes per kilometre of CO2 into the environment.

‘Whilst the increase in the maximum VED charge to £300 and ultimately £400 for the most polluting cars might have grabbed all the headlines, that rise actually impacts on relatively few car owners.

‘However, the alignment of petrol VED with that of diesel is the real story in this Budget because it affects many millions of car owners with an increase well above inflation.’

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