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Is a knee-jerk reaction to VW's emissions scandal imminent?

Posted by: Fleet Licence Check - Thursday, October 29, 2015

Even though the Government reassured fleet owners with VW cars that they would not have to pay higher Vehicle Excise Duty (VED) in the aftermath of the emissions scandal, diesel vehicles could still be targeted in the Chancellor’s Autumn Statement.

Campaign group FairFuel UK believes that operators of diesel cars and vans should not be financially penalised because of a “knee-jerk” reaction to the emissions scandal. Even so, Whitehall sources have revealed that the Treasury might introduce higher tax for this type of fuel.

Possible price rises

While Transport Secretary Patrick McLoughlin previously said the Government “expects VW to support owners of these vehicles already purchased in the UK and we are playing our part by ensuring no one will end up with higher tax costs as a result of this scandal,” he did not elaborate on diesel cars in general.

Now, FairFuel UK understands that in addition to higher Vehicle Excise Duty rates, George Osborne may also introduce a purchase tax on used diesel vehicles, a 1p to 2p rise in duty on diesel but not petrol and even an increase in VAT.

“This could cause used diesel car and van values to collapse and add millions in extra costs to families and businesses across the country,” noted lead FairFuel UK campaigner Quentin Willson.

Uptake of diesel vehicles

In previous years, the government has persuaded fleet operators to purchase diesel vehicles instead of petrol alternatives. In 2001, the Labour Government reduced tax on low sulphur diesel but also told drivers that diesel fuel emitted less CO2 and was better for the environment.

As a result of this policy change, diesel sales in the UK rose. Around 50 per cent of all cars are now powered by diesel, with fleets operating most of these vehicles. However, more than two-thirds (70 per cent) of the pump price is because of tax, making it the highest in the EU for diesel.

Calls for a cut in duty

Along with calling for a duty fuel cut in November’s Autumn Statement by at least 3p per litre, FairFuel UK will also ask for an independent transparent pump pricing inquiry and contact all MPs to find out their position on future diesel taxation.

“There’s a great danger that diesel hysteria could get out of control,” explained Howard Cox, co-founder of FairFuel UK. “This Government needs to reassure businesses and drivers that they won’t face financial hardship for choosing diesel cars and vans.

“Clean air in our town and cities is an urgent priority, but we can’t fix this overnight with draconian taxation levels. Reducing diesel emissions is something that must happen but needs reasoned and informed debate.”

On 8th December, FairFuel UK will ask companies in the fuel supply chain as to how they can influence prices at the pumps. It is also looking at class action in the European Court against a “double taxation of fuel,” as consumers currently pay VATon fuel duty.

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