Press Release: Chancellor’s Tax Policies Are Major Blow To Car Industry

Today’s new car registration figures show that last year’s changes to Vehicle Excise Duty (VED) have now led to a whole year of declining new car registrations. The decline started on the day the new regime that Chancellor Osborne designed, and Hammond implemented, kicked in. The ABD calls on Chancellor Philip Hammond to immediately address the issue before further harm is done. The October budget will be too late.

ABD spokesman Nigel Humphries explains: “Due to the confusion created by the shambolic new tax regime, rather than trading in their existing cars, usually economical diesels with cheap or free VED, drivers are choosing to hang on to their old car. This is having a disastrous effect on new car sales. Why would you buy a new car when a) The road tax will likely be higher; b) If buying a diesel, there is no guarantee that local authorities will not in future introduce all manner of charges for parking or even entering towns; and c) If buying a petrol then economy will be poorer than your existing diesel?”

The ABD calls for four immediate changes in the VED regime to reinstate confidence and fairness in the market:

1. The government must announce with immediate effect that no local authority will be allowed to impose discriminatory charges on any type of car or motorcycle for parking or entering a zone based upon type of motive power. Those that have already, including the London Mayor, must scrap them.

2. The zero VED band and sliding scale should be reintroduced for low emission new cars.

3. VED should be capped at £300 pa for all cars over three years old, ending the anomoly where certain cars sold between 2005 and 2018 pay up to £535. This will help the lower income driver. When newer models with equivalent CO2 figures only pay £140 after the first three years £500+ cannot be justified.

4. New electric cars should pay VED of £500 and the gift of £4,500 from the taxpayer to buyers should be scrapped. It is grossly unfair on other drivers that those who can afford expensive new electric cars cars pay nothing at all to use the roads whilst others pay thousands in fuel duties and VED.  EVs cause as much congestion and wear to the system as any other car.  £500 is still substantially less than most other drivers pay (10,000 miles pa 40mpg car pays around £1,100 fuel tax and VED) and is more than sufficient reward for their green credentials.

Chancellor Should Cut Electric Car Subsidy and cap VED for ULEZ compliant vehicles in Budget

The average driver doing 8,000 miles in a new 40mpg hatchback pays around £900 per annum in fuel tax and VED. Drivers of older cars can pay double this amount. Drivers of electric cars not only pay nothing whatsoever to use the roads, they also receive a gift of £4,000 from the taxpayer when they purchase their new electric car.

ABD spokesman Nigel Humphries explains:

“The ABD has no gripe about encouraging the use of electric cars. They do move the pollution source out of town, although new cars are extremely clean. However, electric cars still cause just as much congestion and wear to the roads as any other car. It is simply unjust when so many are struggling financially to give electric car drivers subsidies and free road use. We would like to see VED of £500 on new electric cars, £100 on existing electric cars and an end to the cash subsidy. This would still mean electric car owners would pay significantly less than other drivers but would pay some contribution to infrastructure costs.”

The new London Ultra Low Emission Zone (ULEZ) sets a minimum standard of Euro 4 compliance for petrol cars and Euro 6 for diesels. As recent budgets have seen a welcome move away from CO₂ and towards NOx taxation, it seems at odds that many ULEZ compliant cars are paying over £300 1 and in some cases £520 VED 2 when they are deemed clean enough for city centres even by the London Mayor’s standards.

ABD spokesman Nigel Humphries said:

The ABD calls for a cap on VED at £200 for all existing vehicles that comply with ULEZ standards. Scrapping the strange anomaly because of which, cars with low NOx emissions are paying very high VED rates, would help drivers of clean older cars who are overpaying for no valid reason.”

NOTES FOR EDITORS

1. 2008 Ford mondeo 2.5 £305 VED ULEZ Compliant
2. 2008 Vauxhall Vectra 2.8 £520 VED ULEZ Compliant