Thursday, March 23, 2006

Road Tax Review, Is It Enough?

Gordon Brown's UK 2006 Budget speech yesterday, added a new band of £210 road tax (or Vehicle Excise Duty) for the most polluting cars. Is this a good move? and if so, is it enough?

The road tax framework of a sliding scale from the least polluting cars taxed minimally, with the scale rising to deter the worst polluting car choices, is ethically correct in principal.

The new road tax band announced yesterday will be for vehicles producing more than 225g of CO2 per kilometre. For comparison:

List A
(Car Manufacturer / Model / Fuel Efficiency (mpg) / Carbon Dioxide Emissions (g/km))

  • Toyota Aygo 1.0 VVTi + 5-dr :: 61.4mpg :: 109 g/km.
  • Vauxhall Astra 5dr hatch 1.7CDTi 16v 100PS :: 56.5mpg :: 135 g/km.
  • Ford Focus 5dr 1.8i TDCi Sport SIV (115 ps) :: 54.3mpg :: 137 g/km
But this new band rate is pitifully inconsequential in real terms!
My point is;
The type of cars which have the bigger engines, lower mpg, and higher polluting CO2, retail for £20,000 / £30,000 / £40,000 / £50,000. A deterrent of an additional £20 quid to this new "top rate" polluter's band of road tax is just laughable.
Some examples:

List B
(Car Manufacturer / Model / Fuel Efficiency (mpg) / CO2 Emissions (g/km) / £On The Road Price)

  • Mercedes-Benz E-class saloon E 350 Avantgarde Auto (petrol)
  • :: 29.1mpg :: 231 g/km :: OTR Price: £36,825.00

  • Toyota Land Cruiser 3.0 D-4D LC5 (8-seat) 5-dr (diesel)
  • :: 31mpg :: 244 g/km :: OTR Price: £36,550.00

  • Chrysler Grand Voyager 3.3i V6 LX (petrol)
  • :: 21.2mpg :: 319 g/km :: OTR Price: £26,750.00

  • Jeep Grand Cherokee 4.7 SOHC Predator (petrol)
  • :: 19mpg :: 352 g/kg :: OTR Price: £29,990.00

  • BMW X5 3.0i SE Steptronic (petrol)
  • :: 21.9mpg :: 312 g/km :: OTR Price: £38,220.00

  • Audi A8 4.2 TDi quattro SE LWB (diesel)
  • ::29.1mpg :: 261 g/km :: OTR Price: £62,575.00

  • Porsche Boxster 3.2 S Roadster (petrol)
  • :: 27.2mpg :: 248 g/km :: OTR Price: £39,160.00

  • Volvo XC90 2.5T AWD SE (petrol)
  • :: 25.2mpg :: 269 g/km :: OTR Price: £34,135.00

Source: http://www.smmtco2.co.uk and http://www.comcar.co.uk


Buyers considering this type of high value, high emissions car, will take more time debating over what features & gizmo's they want (metallic paint / satellite navigation / leather seats / etc), than what road tax band is applied to the car.


The road tax framework has a great potential to enforce the "polluter pays" policy of accountability. But can only be effective if there is a financial incentive to choose less polluting vehicles, and a significant financial dis-incentive to discourage the most polluting vehicles, as the list B above.

£20 is not a financial dis-incentive in the context of a £30,000 car!


To awaken the attention of car buyers, and raise the importance of emissions in car buying decisions, the scale should be like the following:

CO2 Emissions Band - Proposed Road Tax (1 yr)
A up to 100 g/km - £30.00
B 101-120 g/km - £150.00
C 121-150 g/km - £300.00
D 151-165 g/km - £600.00
E 166-185 g/km - £1,000.00
F 186-224 g/km - £2,500.00
G Over 225 g/km - £4,500.00

This kind of scale would assist in encouraging future demand for the emerging clean fuels car markets, and because car manufacturers main purpose is for profit, it is logical that manufacturers will be very interested in fulfilling this demand for vehicles which benefit from low emissions, and as a reward for that choice; low road tax.

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2 comments:

mumoffivegirls said...

Some people have a large family and pollute less by having one big car rather than 2 small cars. We have a chrysler grand voyager (diesel 2.5) whcih is the only car that can take all 7 of us (5 children under 8 ) plus luggage. We have an income of 20000/yr and bought our car using a small inheritance from grandparents. Therefore, I dispute the fact that the doubling of the car tax is insignificant for all, for us it will make a big difference to our budget.

Urban Commuter said...

You must be referring to Gordon Brown's March 2007 Budget. The original post was about the March 2006 Budget.

Even so, it is interesting reading that the average cost of raising a child (birth to 21), ranges from £180,000.00 to a staggering £300,000.00.

Translating this in to FIVE children (why 5?!), averages £1million. (Say £200,000.00 x 5 = £1,000,000.00).

The financial demands of 1 million pounds over 21 years, really puts in to perspective how insignificantly small (even the £400+ proposed) road tax is.

For a humorous comparison, 365 condoms cost £106.31! hehe!

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