Archived press release

Big Motor, Low Tax

9 December 2003

Analysis carried out by Friends of the Earth shows people who buy gas-guzzling sports and luxury cars pay the same road tax as owners of medium-sized family saloons, despite producing vastly greater emissions of carbon dioxide, the main pollutant causing global warming. And owners of new gas-guzzling models pay less road tax in relation to their carbon dioxide emissions than people who opt for the smaller more efficient cars that the Government is encouraging motorists to buy. At the same time there has been an explosion in the number of most-polluting cars with the sale of 4x4s rising by 18 per cent this year while the sale of the most efficient cars is down by 11 per cent [1].

Road tax on new cars in Britain varies according to their carbon dioxide emissions. A Friends of the Earth analysis of government data shows:

Three-quarters of the models on the British market (2,531 of 3,372 ) pay the same top band of road tax. As a result, owners of the Ford Focus 1.8i 16V Estate pay the same as owners of the gas-guzzling Ferrari A456M GTA 2+2, despite emitting only a third of the carbon dioxide.

Owners of gas-guzzling models such as the Ferrari A456M GTA 2+2 pay 2.2 times as much road tax as owners of the most efficient cars, such as the Honda Insight, but emit up to seven times the carbon dioxide.

Meanwhile road tax on older cars scarcely varies. Owners of cars with engines larger than 1549cc pay a rate of 165 while owners of smaller cars pay 110.

Labour promised in 1997 to reform road tax so that less polluting cars pay less and more polluting ones pay more (Labour Party "Consensus for change" 1997). It has cut the road tax on more efficient models but failed to penalise the gas guzzlers.

Friends of the Earth is pressing the Chancellor to rectify this omission. The environmental campaign organisation wants an increase in road tax rates for larger cars so that the tax truly reflects the carbon dioxide they emit. This would increase the tax on the biggest gas guzzlers to about 500, giving drivers an incentive to purchase more efficient models. If applied to both new and older models, this change could raise over 1 billion.

Friends of the Earth Transport Campaigner Tony Bosworth said:

"It's crazy that the owner of a family saloon should pay the same road tax as the owner of a gas guzzling sports car or luxury model. The Chancellor has rightly cut road tax for less polluting cars. Now he should increase it for gas guzzlers."

Background

Road tax (Vehicle Excise Duty) needs to reflect environmental damage.

The UK remains far behind many EU countries in the extent to which Vehicle Excise Duty rises for larger, less energy efficient cars.The UK was the first EU country to vary VED according to their CO2 emissions for cars registered since March 2001, but the variations introduced have been highly asymmetrical. Charges for cars which emit less CO2 have been reduced, but not increased for those that emit more.

The highest tax band (Band D) is for cars which emit more than 185 g CO2/km. Our analysis of the Vehicle Certification Agency's database on the performance of new cars shows that 2531 of the 3372 models on sale in the UK fell into this category. The model with the highest emissions, the Ferrari A456M GTA 2+2 emits 570 g CO2/km, three times the level of, for example, the Ford Focus 1.8i 16V Estate (16 inch tyre), yet it is taxed the same amount. The Ferrari A456M GTA 2+2 emits seven times as much CO2 as Britain's most efficient car, the Honda Insight, but is taxed only 2.2 times as much. Duty on older cars scarcely varies as there are only two bands. Cars with engines larger than 1549cc pay a rate of 165 while cars with smaller engines pay 110. As the VCA web site does not display engine size, we cannot say how many models fall in each category.

New bands are required, based on engine size for older cars and emissions for those registered since March 2001. A top rate of 500 pounds would give drivers a clear price signal to discourage the purchase of larger models. This would also enable the charges for cars registered since March 2001 to more accurately reflect their CO2emissions. The government also needs to apply the same `polluter pays' principle to all road vehicles i.e. higher VED rates for the most polluting vans, motorbikes etc. Vehicles used for work, e.g. by farmers, should remain in a lower tax band. The table below gives an example of how a system might look and shows how much money it could raise. These bands would be based on either engine size or emissions according to whether the car was registered before or after 200

The bands used for this table are merely indicative of the numbers of various sized vehicle engines.

Extrapolated from Department for Transport road vehicle statistics, 2001.

Notes

[1] Autocar, 28 May 2003

Friends of the Earth's full pre-budget briefing (PDF format)

†To view PDF files you will need to download Adobe Acrobat Reader. Visually impaired users can get extra help with these documents from access.adobe.com.

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