Business | General
UK could offer tax cuts to fuel-efficient car owners
UK Chancellor of the Exchequer Alistair Darling is likely to announce measures in his budget on Wednesday to promote the use of more fuel-efficient cars, a source said.
- Bloomberg
- Published: 00:32 March 10, 2008
London: UK Chancellor of the Exchequer Alistair Darling is likely to announce measures in his budget on Wednesday to promote the use of more fuel-efficient cars, a source said.
Darling will offer incentives to drivers to buy cars that pollute less by adjusting the annual vehicle excise-duty payments so that automobiles that produce higher carbon-dioxide emissions are more expensive to run, the person said.
The chancellor will present his first annual budget on March 12.
Cars emitting less that 100 grams of carbon dioxide a kilometre are currently exempt from the tax, while those emitting more than 224 grams are charged at £245 ($493) a year.
For vehicles in between, the duty varies according to how much they pollute. The person gave no details of the way in which the tax might be adjusted.
The British government is seeking to reduce carbon emissions from cars by a third by 2030.
A study it commissioned from Julia King, the vice-chancellor of Aston University in Birmingham, urged the government to create incentives to alter drivers' behaviour. It argued that "demand-side supply barriers" - motorists' resistance to change - are preventing the development of cleaner engines. Such engines would add as much as $1,500 to a car's price tag.
"Consumers must be engaged in order to reduce substantially CO2 from road transport," King said in an interim version of her report published in October.
King's final report, which will be published alongside the budget, will also propose a 'showroom tax', to be charged when a new car is bought. Like the vehicle excise duty, the charge will vary according to emissions.
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