Long-term tax stability will fuel demand for low carbon vehicles

24 March 2004 #SMMT News

Giving evidence today at the Environmental Audit Select Committee, motor industry representatives expressed concern about the effect that year-on-year changes to motoring taxation has on demand for the cleanest vehicles.

The committee’s hearing follows Gordon Brown’s move to freeze carbon dioxide based taxes, including vehicle excise duty and company car tax. The move was broadly welcomed by the industry which had urged caution in the run-up to the budget.

Paul Everitt, SMMT’s head of communications, economics and policy explained, ‘Market transformation is a long-term process, one which requires clarity and stability. The industry has clearly defined targets for CO2 reduction from new vehicles and government is committed to supporting the take-up of cleaner technologies through fiscal means.

‘We need to ensure that this common goal is supported by long-term incentives that send a clear message to consumers, encouraging them to buy the cleanest new vehicles. The fact is that regular changes to the systems of taxation undermine that message and destabilise demand.’

Since 1997 average new car carbon dioxide emissions have fallen by 8.2 per cent from 198.8 g/km to 174g/km in 2002. The latest SMMT carbon dioxide emissions report to be published on 29 March is expected to show a further drop for 2003.


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