Emissions-based Vehicle Excise Duty
Posted in Models, RDAG by Kate Archdeacon on December 12th, 2008
A different way of taxing car purchase & use provides consumers with rational pricing signals, based on environmental impacts, and may provide incentives to purchase more efficient vehicles.
In July 1998 the European Commission and the European Automobile Manufacturers Association (ACEA) came to an agreement that committed ACEA to reduce the CO2 emissions from new passenger cars by over 25% .
In the UK, a number of steps have been taken to promote the purchase and use of more fuel efficient vehicles:
Since March 2001, a system of Graduated VED (vehicle excise duty) has been applied to new cars, based primarily on their level of CO2 emissions. Since April 2002, company car tax has been based on the CO2 emissions of the vehicle provided to an employee for their private use. In 2006 a new zero rate for cars with the lowest carbon emissions and a new top band for the most polluting cars was introduced. This has partially been the result of the failure by car manufactures to significantly reduce CO2 emissions from vehicles.
A new colour-coded environment label for all new cars began appearing in UK car showrooms from July 2005. The consumer-friendly label has been designed to help car buyers assess the climate change impacts of different cars. It will also emphasise that – increasingly – better environmental performance means lower road tax and lower running costs. The gradations on the label are consistent with the CO2 bandings used for Vehicle Excise Duty
More information on the labels.
More information on the Excise Duty.
From “Innovation in mobility for sustainable outcomes†case studies by Geoff Browne.
