New tax system to hit green car sales

Almost two-thirds of UK motorists believe the new car tax system offers ‘little or no incentive’ to buy low CO2 emissions cars, a new study by the AA reveals.

More stringent vehicle excise duty (VED) bands will be come into effect from 1 April 2017 onwards, and only zero-emissions vehicles will be exempt from first year rates. After the first year, a flat fee rate of £140 is charged on all vehicles not categorised as zero-emissions.

Under the new road tax system the amount of car models exempt from paying the standard £140 annual car tax will go from 445 to just 13. The new system will also charge motorists an additional £310 supplement for five years on all cars that cost more than £40,000.

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AA president Edmund King said: “The current graduated VED system works well and encourages drivers to opt for more fuel-efficient vehicles. While our members realised that the system needed to be reformed, they think the proposed system will not encourage the take-up of lower emissions vehicles.

“In the new VED system, only pure electric or hydrogen fuel cell cars will qualify for the lowest band. We believe the current system could have been reviewed to give more incentives for those that opt for lower emission vehicles.”

Under the current scheme, Government figures show that by 2017 three quarters of all new cars would be tax exempt.

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Other industries have also been hit with a fall in financial support from the Government. Subsidies are to be cut on onshore wind, commercial solar power, and industrial biomass burning.

Energy Secretary Amber Rudd said: “My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.

“Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies.”

What do you think of the new VED tax regime? Will it harm the environment more than the current system? Have your say in the comments below… 

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