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Vehicle excise duty
Vehicle excise duty (VED) [should] be graduated.... The priority in such a system should be to provide a further incentive for owners to favour cars with lower fuel consumption, in order to reinforce the impact of a progressive increase in fuel prices (2.55).
The priority in [the case of heavy goods vehicles] is to seek to reduce emissions of pollutants, in particular nitrogen oxides and particulates. The autumn 1996 Budget announced a scheme...to reduce VED by up to £500 for lorries producing low particulate emissions. The July 1997 Budget proposed extending the scheme to include buses.... We welcome the introduction of this kind of incentive (2.57).
- The Government is introducing a new system of graduated VED for cars from next year, which will include a level £50 lower for the smallest and least polluting cars. There will be consultation on the details. The aim is to encourage motorists to take account of environmental impact when buying new or second-hand cars. In the meantime, VED for cars and lorries has been frozen, representing a fall in real terms. When considered alongside the real increases in fuel duty year-on-year, this is shifting the burden of taxation from car ownership to car use.
- Incentives for cleaner vehicles will be provided through VED arrangements for lorries and buses. From January 1999, lorries and buses producing very low particulate emissions will receive an incentive of up to £500 off VED rates to encourage owners to achieve tough emissions standards: for example, by fitting particulate traps to vehicles, fitting higher standard engines or switching to road gas fuels.
- A review of the system for setting VED rates for lorries has been announced to ensure that the environmental damage they cause is reflected in their VED rates. This review will take into account the wider environmental impacts of lorries as well as their physical effects on road infrastructure. The present system does not, for example, take axle loading, which has a substantial effect on road wear, properly into account. With the introduction of new lorry weights it will be particularly important to ensure that those operating vehicles with 11.5 tonne maximum axle weight pay a rate of VED commensurate with their increased road costs in comparison to vehicles operating at a maximum of 10.5 tonnes
Published 23 December 1998
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