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Report Says New Car Tax Rates For Second Hand Cars Is Fair
Posted by admin | Posted in Used cars | Posted on 01-09-2010
It’s a year of changes and controversies for sure!! There are so many changes that are made within a year in the legislation and so many amendments are on table and also on the floor. One of such amendment that was made in the automobile sector was to change the car tax rate for the second hand cars bought. Firstly, the world is deepening deeply into the Recession oceans and these amendments will increase the burden of the buyer and seller of second hand cars.
Automobile sector is the worst hit sector of the world in this Recession. So, the voice and oppose was raised towards the amendments. The review committee revised it but found no need of making any changes in the tax structure of the newly designed rates. Let’s see some of the details of this report that was published today.
The Vehicle Excise Duty as an environmental tax, the Environmental Audit Committee stated in the public statement against the media that there is nothing intrinsically unfair about setting new VED rates forcars that are already purchased.
To make you a brief, in this year’s Budget, the VED rates were rose for existing cars with higher emissions registered since 2001. This change has covered almost 1.1 million high carbon cars, registered between 2001 and 2006, and the critical factor was that suddenly the VED was raised to more than double, from £210 to £430 or more.
The Committee suggests rebanding existing cars. The aim of the committee was to persuade the buyers to go for the cars with a low emission, to reduce the worsening impact on the environment. The low becomes important as three-quarters of all car sales are second-hand.
Also the Committee made a statement for those who were suffered by this tax rise, as most of the sufferers were of the middle class ad might not bare the load of this tax rise. The Committee said that they are aware that effect of this tax raising would make more impact on the lower income households, but they have no exact data and figures as to what extent these people will be disadvantaging.
The Committee ha already exempted all the disabled drivers from paying this excess VED, but still they made a comment to cover them with the same rule by making some arrangements later on.
One more suggestion was made by the Committee that a new scheme of “car scrappage” should be introduced. According to this scheme the Treasury should offer all the drivers an amount of payment that can boost the drivers of high emissions to switch them to more efficient model. A help of some amount will inspire them to move forward to better models and gradually all the high emission vehicles will be eliminated.
The Committee was not happy with the way the amendments were introduced in the Budget. They were of the view that these changes of VED should have been introduced later after the budget. The details and objectives of VED and other environmental taxes could have been imposed in the future. Even they were not happy that while announcing these changes, they did not calculate the impacts of the Budget on emissions from second-hand cars, as it was prime objectives of the changes.
Other major change announced while Budget is a series of new first-year rates of VED which are higher for the high emissions cars and lower for low emissions cars. These first year changes were appreciated and the Committee notes that notable cuts in emissions could be made desperately and rapidly only ad only if the buyers are persuaded to select only the efficient cars in any class. Still, the Committee is not yet decided about the effect on purchasing after these major changes.
Strangely enough, the Treasury himself made a statement that, the changes announced with the help of VED will have over all very limited environmental benefit. The Committee has asked to find some of the stronger approach and steps that can overcome the high emission car problem. They were also interested in the announcements by the Government to announce huge tax discount on the lower emission and higher carbon savings car.
They also suggested that the Government should accelerate the development of new vehicle technology, improve public transport, and encourage car-sharing schemes.
Whereas the Treasurer had a different view, the Chairman of the Committee, Tim Yeo MP, said: “The changes to car tax announced in the Budget are a step in the right direction. Raising the rates on high emissions cars that are already on the road could encourage sales of more efficient models in the second-hand market.”
He also ascertained that the first-year rates introduced for new cars will create a kind of ’showroom tax’, that could be used to influence buyers of new cars to choose the most efficient model in each class.
“However, the differentials between high and low carbon cars are still nothing like wide enough to make a big impact in practice. Even the Government is convinced that these changes are not great impact makers to the environment. There should be some more and effective ambitious, matching increased charges on high carbon cars with discounts or rebates on low emissions vehicles.
The Treasury must also urgently work to ensure these changes are not unfair to vulnerable groups. It also should be taken care that the people should not have a big negative impact by these changes and also the disabled drivers must be exempted.
Also the Government suggest that the Treasury should make a good communication with the people and should make them aware of the plus and minus of the green policies. People should be motivated by own and not the heavy laws should be imposed.
These changes can be more practically implemented by making revenue neutral-tax changes, or explicitly hypothecating some of the revenue raised from green taxes towards spending on the environment. A good Advertise campaign should be taken on for the green tax and people should be influenced to participate more and more for the environmental purposes.