AutoblogGreen

With the number of 120g/km and better cars that will be available by the time this comes into force, it might drive people even further in the right direction? But £60 is about the same as one tank of fuel now so will it really make much of a difference if it's a £20, £30 or £40 jump?

By the way this change to the vehicle excise duty came from the Chancellor (Secretary of the Treasury?) and so comes from central government rather than London.

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This has absolutely nothing to do with the London congestion charge or Ken Livingstone.

This is "vehicle excise duty" (hence VED) payable annually on vehicles in the UK.

As this article stands, it leaves you looking completely clueless.

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I agree, the increase column should read progressively higher numbers. I also think the bands for the cars with highest emissions are way too lax.
France and Spain have already implemented such a system with far fewer bands but more than double the VED for the worst band, with exquisite results -
e.g.in Spain for both January and February 2008, SUV sales have fallen by 40% to 60% (depending on the class of SUV)

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At the moment there are 7 bands, not 12. The new system will be implemented starting from 2009 (somewhere in March 2009)

Band A Up to 100 CO2g/km
Band B 101 to 120
Band C 121 - 150
Band D 151 - 165
Band E 166 - 185
Band F 186 - 225
Band G 226+

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Interestingly the three largest of the new bands in terms of new car sales are G, F then E. A higher band D is logical from a revenue raising perspective (which this is) because the market will shift down the bands towards D. Therefore it's not entirely surprising that D is weighted a little higher.

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I think Clean Green Cars didn't do the math.

It's clear that the market shares of Bands A-C have to increase substantially to reduce fleet average CO2 emissions into the Band D range. So it makes perfect sense to have a larger tax increase at the transition from Band C to D.

While Band M has the most polluting cars, its market share is already low. Even a dramatic reduction in the number of cars in that band alone will not have a big effect on average CO2 emissions. Significant "persuasion" unfortunately has to begin at the lower bands.

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My only question is do they factor in the mileage driven. If someone wants to by a G-Wagon and drive it 1,000 miles a year they emit less CO2 than someone driving a VW Polo 10,000 miles a year.

I am in favor of raising the gas tax in the states, but the problem is that it is regressive and will unfairly "punish" the less fortunate. Therefore i think it would make more sense to have a tax system tied into the annual vehicle registration in which the previous years mileage is taken into account as to how much extra you pay in tax. Those that meet certain financial requirements would be exempt.

Its not just what you drive, its how far you drive it too.

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The old rates didn't make any sense and neither do the new ones. If the intent is to influence purchasing decisions, consumers have to be confident that there will be no more changes other than inflation adjustment for many years.

However, the proposed structure includes steep steps at 101 and again at 121gCO2/km. If manufacturers respond by producing vehicles that come in just under these limits, that will be good for the environment but not for public finances - prompting hikes to plug the hole, which negates part of the initial incentive to buy.

A fair and logical system would set the tax rates as a linear function, discretized into bands 20gCO2/km wide. The tax due for the band is that for the *highest* value that falls within it.

The linear portion should reflect the energy security and climate change impacts of the emissions, at a modest rate of e.g. GBP 0.25/(gCO2/km). Vehicles that emit no CO2 at all are not subject to this linear portion.

The constant coefficient should be 0.5% of the vehicle's original MSRP, reflecting the fact that those who can afford expensive cars should also make a greater contribution to society.

Example A: car with MSRP of GBP 10000, emitting 101-120gCO2/km. Annual road tax: GBP 80

Example B: car with MSRP of GBP 50000, emitting 221-240gCO2/km. Annual road tax: GBP 310

Example C: car with MSRP of GBP 100000, emitting 341-360gCO2/km. Annual road tax: GBP 590

Example D: BEV with MSRP of GBP 30000, emitting 0gCO2/km (only tank-to-wheels emissions are considered). Annual road tax: GBP 150

The latter figure may seem unfair to BEV proponents, but remember that this is just the road tax portion of the total tax bill. The remainder comes in the form of taxes on energy - both fuel and electricity - and VAT on top of that. All told, the BEV owner will pay a lot less tax than those driving on gasoline or diesel.

Note that all of the numbers I've proposed above are substantially higher than those in the proposal described in the article. This is because people will only avoid owning a (second or third) car if the alternatives are made attractive enough via subsidies on operations (public transport, sharecabs) and/or infrastructure (rail tracks, rolling stock & buses, bicycle paths).

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"However, the proposed structure includes steep steps at 101 and again at 121gCO2/km. If manufacturers respond by producing vehicles that come in just under these limits, that will be good for the environment but not for public finances - prompting hikes to plug the hole, which negates part of the initial incentive to buy."

And under your proposal, rgseidl, people may very well respond by purchasing less expensive cars with the same or higher CO2 emissions, because the tax is mostly based on MSRP. (In your Example B of the GBP 50000 car, GBP 250 of the tax is due to MSRP, while only GBP 60 is due to CO2.)

This would be bad for BOTH the enviroment and public finances.

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I think the biggest problem that responders to the blog appear to have is distinguishing between an "envy" based tax based on the value of someone's car (higher value cars often have higher emissions figures) and a green eco-tax that is designed to reduce C02 based pollution. Road tax is almost completely the former - it does viritually nothing to reduce overall emissions but uses the public's natural tendency to envy those with expensive cars to justify very significnat tax hikes - it is purely about revenue generation. Sadly, people who want to reduce overall emissions need to get over the tendency to assume that it is the responsibility of those perceived as rich to achieve this. The only way to reduce emissions to a significant degree is to reduce the mileage driven by everyone with a car, not just the small proportion with a 'high' emissions vehicle. Increased fuel duty or some other form of mileage duty is the only way to do it - the sad fact is that people on lower incomes will be affected more because they have less to spend in the first place, but for the purposes of reducing CO2 levels this is irrelevant.

Therefore people who want to reduce CO2 emissions from cars need to ask themselves - is government policy about raising tax revenues or achieving meaningful reduction in CO2? I would say that VED is firmly the former.

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