Archived press release

Budget '98 - british road tax " a gift for greedy gas-guzzlers"

18 February 1998

Drivers of small cars are paying a heavy bill to keep greedy gas-guzzlers on the road,Friends of the Earth warns today. A new FOE survey reveals that road tax (vehicle excise duty) on small, fuel efficient cars is higher in Britain than in Belgium, Germany or Ireland. Meanwhile drivers of gas-guzzling monsters pay less. In a letter to the Chancellor today,FOE is demanding urgent action to end this tax rip-off in the March Budget.

Britain is the only country in Europe in which you pay the same road tax if you drive the most fuel efficient car on the road - the Suzuki Swift - as you do if you drive the least fuel efficient - the Ferrari F50. Friends of the Earth's survey compared road tax rates for these models, Britain's most popular car and Britain's most popular company car, in the UK and in neighbouring countries [1].

The survey shows that if you drive a Suzuki Swift in Britain, you pay more road tax than you would in Belgium or Ireland and over three times as much as you would pay in Germany.Yet, if you drive a Ferrari F50 in Britain you pay less than in Germany and Ireland, and less than a seventh of the road tax payable in Belgium [2].

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The Labour Party, in its pre-Election transport policy paper, “Consensus for Change”promised to reform road tax by introducing “a graded system, designed to ensure that more efficient, less polluting cars will pay less and less efficient ones will pay more”. The Chancellor, Gordon Brown failed to announce changes in the system in his Summer 1997 Budget and in the “green budget” consultation in November [3].

Charles Secrett, Executive Director of Friends of the Earth said:

“Britain's flat rate road tax is nothing more than a gift to greedy gas guzzlers. And it's a rip off of everyone who drives a small, sensible and fuel efficient car. Nowhere else in Europe has this ridiculously unfair system. Labour promised to abolish this crazy system when in opposition. The Chancellor must announce its end in the next Budget”.

Friends of the Earth is lobbying the Chancellor to abolish the flat rate road tax system, as part of a package of tax changes to encourage greener lifestyles. This would also include a general increase in the price of petrol and diesel and greater spending on public transport,cycling and walking [4].

[1] Friends of the Earth calculated how much road tax (vehicle excise duty) you would pay if you ran one of four models in the UK, Ireland, Germany and Belgium - our nearest neighbours - based on information from the Governments concerned. Holland and France were excluded from the survey because the amount of road tax paid varies from one part of the country to another.

Details of the models chosen are as follows:

MOST FUEL-EFFICIENT PETROL CAR IN BRITAIN (according to Vehicle Certification Agency data)
SUZUKI SWIFT 1.0 GL/GLS/GLX
Engine size:1000cc
Fuel consumption51.4mpg (5.5 litres/100km)

BEST SELLING CAR IN BRITAIN (according to Society of Motor Manufacturers and Traders)
FORD FIESTA 1.3 EFi
Engine size:1300cc
Fuel consumption:41.5mpg(6.8 litres/100km)

BEST SELLING FLEET CAR IN BRITAIN (according to Fleet Car magazine)
FORD MONDEO 1.8i 16v
Engine size:1800cc
Fuel consumption:34mpg(8.3 litres/100km)

LEAST FUEL EFFICIENT CAR IN BRITAIN (according to Vehicle Certification Agency data)
FERRARI F50
Engine size:4600cc
Fuel consumption:10.6mpg(26.5 litres/100km)

[2] Furthermore, in Belgium and Ireland you also have to pay a far higher registration tax just to buy a large car than you do if you buy a small one. Britain no longer charges a tax on the purchase or registration of a new car. Neither does Germany.However many other European countries do. In most cases the amount charged is related to the size or the cost of the new vehicle. This also acts as an incentive to buy a smaller, more efficient car.

Registration taxes in the four countries for the four models are as follows:

[3] The Labour Party 1996 “Consensus for Change: Labour's transport strategy for the 21st century” p. 17. Furthmore, Labour's manifesto promised to continue the Conservatives' review of vehicle excise duty to promote low-emission vehicles.

[4] Friends of the Earth wants the Government to introduce a road tax system similar to that used in Germany. Their system takes account of both how fuel efficient and how polluting a car is, before calculating how much its owner should pay.Prospective purchasers have a real incentive to buy cleaner, more fuel efficient cars.A fiscally-neutral way of doing this, applicable to the UK, has been proposed by the Institute for European Environmental Policy.

Friends of the Earth is also urging the Chancellor to increase fuel duties by 8% in real terms (2% above the increase to which he is already committed); abolish mileage bandings for company cars and investigate the potential to tax parking.

[5] Total income from Vehicle Excise Duty is about £4.5 billion a year. For comparison income from tobacco duty is about £8.4 billion, from alcohol duty about £6.4 billion,and income from air passenger duty about £0.8 billion.

If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.

Published by Friends of the Earth Trust