Car Tax: Another Green Tax

The April Budget, 2010, brought in steep increases in tax for car owners, especially those with high fuel consumption.

Under a new government scheme, Vehicle Excise Duty rates have been increased to reflect car engine emissions - and fuel consumption.

An additional payment to the Treasury, called a 'showroom tax' will be charged for the lowest-mpg models.

The increases were announced a while back (2008) but come into force now.

The combined first year excise duty and showroom tax on a vehicle with high fuel consumption will be £950.

Smaller cars with very low consumption will pay no tax in the first year.

One hopes, perhaps unjustifiably, that the monies raised will be used on something worthwhile.

It is informative to look at another car-related financial 'package' introduced by government - car 'scrappage', where 'new for old' and a £1000 subsidy matched by manufacturers might create a boost for the car industry.

The National Audit Office found earlier this year that the scheme did not represent value for money.

Lord Mandelson over-ruled this advice and went ahead with it, on the grounds that sales made during a recession were worth more than future sales.

It is difficult to see how scrapping perfectly serviceable cars before they have worn out is good for either the economy or the environment.

ND, habitat21

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