In the 2000 Pre-Budget Report, the Chancellor announced a fundamental reform of Vehicle Excise Duty for goods vehicles. These reforms would reduce rates - at a total revenue cost of around £300 million per year - and simplify the existing structure. At the same time, a consultation document on the details of the reforms was published.
The consultation closed on 12 January 2001. A total of 45 responses were received. In addition, the Government convened a meeting with the principal trade organisations on 8 January 2001. The views expressed at that meeting were generally in line with the wider response to the consultation paper.
A detailed breakdown of the responses to the questions - along with a summary of comments received - is attached at Annex A. A list of organisations responding is attached at Annex B.
In general, there was strong support for the direction of the Government's proposals. Particular support was expressed for proposals to simplify the tax system.
The principal area of concern was that the reforms would reduce the maximum cash value of the Reduced Pollution Concession from £1000 to £500, thereby greatly reducing the incentive for goods vehicle operators to fit particulate traps. The Government is responding to this concern by making targeted public subsidies available to encourage the purchase of particulate traps and other retrofitting devices in the poorest air quality areas. Some respondents also raised the issues of international competitiveness, the level of fuel prices in the UK, and expressed support for the principle of charging for the use of roads.
Department of the Environment, Transport and the Regions and
HM Treasury
March 2001
Q. Do you agree with the objectives of the reforms?
Yes: 95.6% No: 4.4%
A number of comments were received, stressing the importance of international competitiveness.
Q. Do you agree with the overall direction of the reforms?
Yes: 97.8% No: 0% No answer: 2.2%
Comments were received suggesting that respondents would like to see the reforms go further. Some respondents stressed the importance of ensuring that the reforms were placed in the context of a vignette scheme.
Q. Do you agree that vehicle weight, the number of axles and the amount of pollution reduced are the best criteria for determining the degree of track and environmental damage imposed by different lorries?
Yes: 73.3% No: 17.8% No answer: 8.9%
Some respondents expressed support for including European emission standards in the criteria.
Q. Do you agree with the Government's objectives to rationalise and reduce the number of lorry VED bands?
Yes: 91.1% No: 0% No answer: 8.9%
Q. Would broader rate bands make it easier for you to carry different weight loads and change axle formation, especially when using trailers?
Yes: 73.3% No: 11.1% No answer: 15.6%
Q. Do you agree that the rate bands should be broadly based on the environmental and track costs that the vehicles impose?
Yes: 86.7% No: 6.7% No answer: 6.7%
Q. Do you think that the illustrative lorry VED rates and the relationship between them accurately reflects environmental considerations and international competitiveness concerns?
Yes: 60% No: 33.3% No answer: 6.7%
Many of those who commented said that the new structure was a step in the right direction. But there was some concern that continental operators would continue to enjoy a competitive edge, and that the Reduced Pollution Concession had been eroded.
Q. What improvements would you like to see made to the administration of lorry VED?
The most popular suggestion was electronic relicencing, mentioned by more than a quarter of respondents. Other suggestions included quarterly licencing and use of direct debit. Some respondents called for a wider range of vehicles to be taxable at post offices.
Q. Please describe and quantify any costs of compliance with the first element of reforms described above.
First year costs:
Under £15,000: 97.8% £15,001 to £30,000: 0% £30,001 and above: 2.2%
Continuing costs:
Under £15,000: 97.8% £15,001 to £30,000: 2.2% £30,001 and above: 0%
Q. Do you have any other comments on issues raised in this document?
The main issues raised by respondents were concerns at the level of fuel duty (22%), concerns over the future of the Reduced Pollution Scheme (20%) and support for foreign hauliers paying a charge for the use of UK roads (15%).
Road Haulage trade bodies
Road Haulage Association
Freight Transport Association
Freight Operators
Christian Salvesen
English, Welsh and Scottish Railways
Techical bodies
Dinex Exhausts Limited
General
Confederation of British Industry