Tax revenue under threat as more drivers go green
Posted by Anna Macintyre on Thursday, 31 May 2012, 16:13 in Environment
The government's coffers are under threat due to an increasing number of drivers choosing energy efficient vehicles. Currently, motorists are rewarded for driving cars that produce minimal CO2 emissions by having to pay less in Vehicle Excise Duty (VED) each year. The greener the car, the less people pay. Drivers of electric vehicles are effectively subsidised by those with more inefficient engines and higher emissions, and manage to avoid annual road tax completely. According to a report by the Daily Telegraph, VED brings the Treasury about £6bn a year but that figure is falling as more people look to save cash and choose vehicles that release less CO2 into the environment. As a result, ministers are said to be considering an overhaul of VED rules to protect the government's revenue stream. The newspaper said motoring groups and other interested parties have been asked to take part in a discussion on potential changes to the system. A source familiar with the matter, said: "Revenues are under threat and it's pretty clear that the Treasury needs to do something to increase its tax take or face losing a lot of money." Labour has accused the government of not being open about its plans and called on ministers to come clean about what it called the new "stealth tax".
