Call for tax regime to address air pollution concerns
15 Aug 2019
In order to cut dangerous levels of air pollution in the UK, the government should lift the freeze on fuel duty, introduce a surcharge on diesel vehicles and exempt the most eco-friendly cars from VAT, according to research from think tank Bright Blue
15 Aug 2019
The research suggests 71% of UK adults are concerned about the impact of air pollution on the health of themselves and others, while 69% think the government should reduce air pollution below current levels, and investigates ways in which this could be incentivised.
It makes three recommendations for reducing air pollution from the transport sector. The first is to lift the freeze on the value of fuel duty by reinstating the fuel escalator, which has been in place since 2010, from the new tax year in 2020-21. In addition, diesel fuel should attract a surcharge of fuel duty in its sale. This could be badged as a ‘diesel duty’.
Secondly, the report calls for the introduction of an ongoing surcharge for vehicle excise duty (VED) on new diesel cars in the UK, dubbed diesel excise duty (DED). At present, there is a higher charge faced by drivers of diesel vehicles only on their first VED payment. After the first year of VED payment, petrol and diesel cars are subject to the same ongoing VED payments, and electric cars are fully exempt.
Bright Blue recommends that a diesel surcharge on ongoing VED payments be introduced in the next tax year. Together with the tiered initial payment, this would create a separate DED, for all new diesel vehicles registered.
Finally, the report suggests exempting the purchase of all categories of ultra-low emission vehicles (ULEVs) from VAT. These are defined as vehicles that emit less than 75 grams of carbon dioxide (CO2) per kilometre travelled (g/km). Recently, it was forecast that EVs will only be 75% of new vehicle sales by 2040 based on current incentives – falling short of the government’s target of phasing out fossil fuel car purchases by 2040.
William Nicolle, researcher at Bright Blue and co-author of the report, said: ‘Stronger evidence has emerged in recent years about the detrimental impact of air pollution to human health, the economy and the environment. Consequently, there is growing public and political pressure for tougher action to reduce levels of air pollution in the UK. The UK’s departure from the EU means that there is an opportunity to raise air pollution standards in the UK.
‘The UK Government needs new, ambitious legal limits, legal responsibilities and policies on air pollution. This country should aspire to be a global leader on yet another environmental issue, and strive to become the country with the cleanest air in urban areas in the developed world.’