Industry hits out at planned VED alterations

Saturday, January 7th, 2017 - autos, cars, motoring, news

Source : Industry hits out at planned VED alterations

Chancellor says motorists will get a better deal nevertheless motoring industry displays mixed reactions to the alterations

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The motoring industry has reacted in a mixed manner to the alterations to VED, MOTs as well as insurance announced inside 2015 Budget.

The road tax system is actually set for the biggest overhaul, as the current Vehicle Emissions Duty (VED) system is actually being largely scrapped coming from 2017. the idea will be replaced a three-band system where cars will be classified as Zero Emission, Standard as well as Premium. Only cars which emit 0g/km – only electric vehicles for today – will pay nothing, while all different cars will pay £140.

The exception is actually cars which cost more than £40,000, which will be subject to an extra £310 charge, meaning many cars will face a £450 annual road tax payment. This specific applies even to cars which emit 0g/km, like the Tesla style S, which will have a £310 tax bill.

There are still 13 bands for the first year of a car’s life, with those which emit less CO2 paying less tax. Cars emitting between 1-50g/km will pay just £10, while those which emit more than 255g/km will pay £2000.

Addressing Parliament, Osborne said the current VED system “isn’t sustainable or fair” given the rise in low-emission vehicle ownership, which has seen increasing numbers of people paying no VED at all during their first year of ownership. The statement revealed which the system will be reviewed as necessary to make sure the cleanest vehicles are incentivised. However, the Society of Motor Manufacturers as well as Traders (SMMT) has expressed concern which the industry wasn’t consulted on the plan. 

Reacting to the Budget, SMMT chief executive Mike Hawes said, “The Chancellor’s Budget announcement on the regime came as a surprise as well as is actually of considerable concern. While we are pleased which zero-emission cars will, on the whole, remain exempt coming from VED, the brand-new regime will disincentivise the take-up of low-emission vehicles. brand-new technologies such as plug-in hybrid, the fastest-growing ultra-low emission vehicle segment, will not benefit coming from long-term VED incentives, threatening the ability of the UK as well as the UK automotive sector to meet ever-stricter CO2 targets.

“The introduction of a surcharge on premium cars also risks undermining growth in UK manufacturing as well as exports. British-built premium cars are in increasing demand at home as well as globally, as well as the industry helps to support almost 800,000 jobs inside UK. Levelling a punitive tax on these vehicles will almost certainly impact domestic demand.”

Figures coming from the SMMT reveal which demand for low-emission vehicles is actually helping to drive growth inside UK’s brand-new car market. In June 11,842 ultra-low emission vehicles were registered inside UK – a four-fold increase on the same period in 2014.

The Premium tax was slammed by Jaguar Land Rover, which said: “Jaguar Land Rover believes placing a tax on vehicles over £40,000 sends a very negative symbol to the UK’s premium automotive industry. The UK should be proud of its premium car manufacturers, which support huge numbers of jobs as well as investment, not specifically penalise the idea.”

Meanwhile, Mitsubishi, which has seen a surge in sales of its plug-in hybrid Outlander, is actually less fazed by the revamp, saying: “We wouldn’t expect the alterations to affect PHEV. There are a lot of different incentives in terms of economy as well as cost of running the vehicle.”

The AA felt which motorists would likely make car-buying decisions on the alterations, though, saying: “If you are prepared to take the first year hit, people will ask what the benefit is actually of going for a car inside A, B or C bands – if you pay a premium inside first year you can have something which emits more CO2.”

The money raised coming from VED will be set aside for a newly created roads fund, which will be put into action at the end of This specific decade to pay for the upkeep as well as improvement of Britain’s roads. Osborne said the brand-new fund was designed to create “the sustained investment for the roads we so badly need”. “This specific is actually a major reform to improve the productivity of our economy as well as improve life for the motorist,” he added.

Osborne said four fifths of journeys inside UK are today taken by road, as well as yet the UK has built just 300 miles of motorways inside past 25 years.

The Chancellor has also kept the promises he made during last year’s autumn budget, reiterating which fuel duty would likely remain frozen because of This specific year.

Describing his budget as a “budget for working people”, Osborne said: “Our long-term economic plan is actually working, nevertheless the greatest mistake This specific country could make is actually to think which all our problems are solved.

“This specific is actually a big budget for a country with big ambitions.”

Are the alterations the right approach?

YES – Hilton Holloway

There’s a big problem with so-called ‘green taxes’. Back inside noughties, green taxes were seen as the best way to change behaviour.

The London Congestion Charge as well as CO2-based car taxation were both acclaimed as successful green taxes. Of course, the problem is actually which if green taxes do change behaviour, This specific also means the amount of tax raised will drop sharply.

The government’s own projections showed which the money raised coming from VED was about to crash coming from £4.4bn per year to under £3bn by 2020-21. With the UK still borrowing ten of billions each year, Osborne’s reforms were inevitable.

However, the upside is actually which, by 2020, the money raised coming from (what can today be properly called) road tax will be ring-fenced for the 1st time since 1937 as well as used only to maintain the roads.

Motoring is actually not cheap, nevertheless at least we’re going to get some improvement to the shattered roads for our cash.

NO – Jim Holder

At a stroke George Osborne has decided which one of the chief motivators for buying a low emission car will be swept away. He has done so without consulting a car industry which has invested so heavily in meeting ever more stringent targets as well as he has also set a different standard to which in place across the rest of Europe.Why he has done so is actually less clear. He could have simply moved the VED CO2 bandings down, continuing to incentivise buyers to look at ever more efficient cars while keeping the government’s coffers topped up. Sure, a true road tax should focus on road use – nevertheless an adaption of the old system could have included an emissions benefit too.

What we’re today facing is actually an inconsistent set of legislation which rewards low emissions sometimes (company car tax, for instance) nevertheless not others. All the while, he’s extended punitive VED taxes to cars costing more than £40k – at the same time as de-incentivising makers of these cars coming from developing the kinds of innovative low emission technology which they have traditionally pioneered.

To my mind, the Budget seems to have delivered a set of regulations which are confusing to the motorist as well as damaging to the industry’s progress with low emission technology.

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