SMMT: VED changes will distort market with little effect on CO2 emissions

The Society of Motor Manufacturers and Traders¡¯ initial response to the budget was to say that sales taxes on higher emitting cars have little effect on CO2 emissions and create an unwelcome market distortion.
 
¡°Since the introduction of CO2-based road tax in 2001, there has been a clear trend towards lower-CO2 new cars,¡± said SMMT chief executive Paul Everitt. ¡°Encouraging even more buyers to choose models with class-leading emissions should be the priority. We are therefore pleased to see an increase in the number of bands to 13 from 2009.
 
¡°However, introducing what is effectively a sales tax for many new cars is a retrograde step. Trying to force people out of high-value cars has no environmental merit and will be seen as a smokescreen for revenue-raising.¡±
 
The SMMT believes the key to driving demand for cleaner cars is to improve incentives in what are currently the middle bands; these make up more than three-quarters of new car sales. It is encouraged therefore that the number of bands will increase to 13 and welcomes the certainty that comes from a system set until 2011.
 
The SMMT notes that the budget will take VED to a more linear framework, like that applied to company car tax. This rewards drivers who specify lower-emitting models within each class, as well as lower CO2-emitters overall, through a linear pathway of 5g/km tax increments. Since its introduction in 2002 this long-term model has worked, encouraging sales of lower-CO2 emitting company cars.
 
Sue Robinson, the director of the Retail Motor Industry Federation said, ¡°The Chancellor is attempting to encourage the motorist to move to lower emitting cars with the increase in Vehicle Excise Duty (VED) for large vehicles, He asserts that the reclassification of vehicles into six new VED bands will force motorists to choose lower emitting vehicles, but the inducements are so small, that the effects are likely to be equally small.
 
¡°There are more effective ways to influence the buying habits of motorists than the "blunt instrument" approach of a road tax increase.
 
¡°It will be those who really need larger vehicles for their daily lives that suffer most. Families, rural dwellers, farmers, and business users are less able to absorb this increase, as they are already paying extra to use their vehicles through fuel duty, company car tax, and other measures.
 
¡°Instead of punishing motorists for choosing what is available, the Government needs to do more to assist vehicle manufacturers to develop cleaner vehicles. Consumers need to be given a proper choice, and manufacturers and vehicle dealers need to be able to give it to them.¡±
From: auto industry.uk/news

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