Green Cars Mean More Cash?

Photo credit: Steve Jurvetson

We tend to think that going green is something which the Government encourages us to do, but rumours abound that the Treasury has plans to introduce a green car tax.

The idea has come about because the nation’s coffers currently receive less income from the owners of smaller cars which cause less pollution.

Opposition MPs are calling it a stealth tax while Government ministers admit that something needs to be done to the Vehicle Excise Duty regulations in order to keep public finances in order.

An idea which has been floated is that of levying a one off charge on brand new green cars instead of increasing the annual tax on them. The only official word so far is Treasury Minister Chloe Smith, who said that Vehicle Exercise Duty (VED) needs to “support the sustainability” of the public coffers and “reflect the improvement” which we have seen in fuel efficient vehicles in recent years.

Around £6 billion in VED gets raised every year in the UK but this figure will keep falling from now on if people start buying more and more fuel efficient vehicles with lower tax levels. As well as the hybrid cars, it is clear that even conventional vehicles are becoming greener, and this, at present, means that the owners pay less tax on then.

Stick to the Old Car Instead?

Meanwhile, the President of the Automobile Association is Edmund King, and he said that an increased tax for environmentally friendly cars could result in more motorists sticking to less clean vehicles. It would be ironic to see that the dawn of clean cars could be set back because the country needs to keep on collecting the higher rate of tax which less environmentally friendly ones generate.

Do you think that a lower rate of tax is a reason for buying a greener car or would you make the switch anyway? That is the question which you might have to think about soon.

One thought on “Green Cars Mean More Cash?

  1. It comes as no real surprise that the government are considering some form of green car tax. I remember saying, years ago, when the lower rate of VED was introduced for lower emitting vehicles, that in years to come the vehicles would become so efficient that they’d have to start taxing these cars again. Lets face it, the only reason the tax rate was reduced (in some cases to £0) was so that the U.K. could have a decent stab at hitting the strict target for Co2 emissions that we signed up to – we’ve got Brussels to thank for that!

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