|
| Personal finance articles |
|
|
|
Green taxes to hit family cars
By Sarah Coles
You'd struggle to find anyone with an ounce of sympathy for the owner of a gas-guzzling Chelsea tractor, forced to pay a few extra hundred pounds a year to take their off-road vehicle down the dangerous terrain of the high street. The green taxes in the budget were therefore introduced as a step towards denting CO2 emissions, and restoring sanity to the roads. On further analysis, however, it emerged they are destined to fail - and will simply hit drivers of ordinary family cars instead.
The basic idea is to introduce new bands for vehicle excise duty in the tax year 2009-2010, based on their CO2 emissions. Drivers of green cars will pay less while those driving high emission vehicles will pay more. The reforms also include special charges for the first year, dubbed a 'showroom' tax, which will amount to £950 for the most polluting cars. The idea is that you're rewarded for driving a green car, and punished for driving an gas-guzzler.
If you own or buy a very low emissions car you're onto a winner. You'll pay nothing if you buy a Prius, VW Polo BlueMotion, Honda Civic Hybrid, Citroen C1 or Mini diesel, for example. Alternatively, if your car emits less than 150g/km, you'll pay a much-reduced level of tax. This is good news for drivers of cars like the Mini Cooper 1.6, Peugeot 307 1.6 and Vauxhall Corsa.
However, on closer examination, higher tax bands aren't reserved for the worst examples of gas guzzling. Paul Watters, head of public affairs for the AA says: "Some models of popular people carriers fall into the £400 a year band, including the Renault Espace and Skoda Superb." The jury is out on whether people carriers are an absolute necessity for most families. But if you're a family of five or more, have dogs, a DIY hobby, or simply do a fair amount of shifting and fetching, there's a good chance you own one because you need one, rather than because you enjoy the indulgence of space.
And it's not just people carriers that fall foul of the new rules. From next year, Watters adds: "The £260 band will contain all sorts of family cars, including the new Ford Focus 1.6 litre, Citroen C4 2 litre manual, Vauxhall Astra and VW Passat Estate." That constitutes an extra cost of £90 a year for all these cars. And these aren't big wallowing self-indulgent status cars. They are the basic minimum for a family of four that wants to travel safely with luggage.
It's going to hit Nicky Fox, a 29-year-old administrator from South London, who bought a second hand Volvo estate after the birth of her son in 2006. She says. "It's hardly going to make any difference to someone who is spending £120,000 on a sports car to have to spend an extra grand, but the changes will affect me. I pay enough tax on my salary, enough tax on the car when I bought it, and enough tax on the fuel to fill it, why should I pay more?"
Are you in the band?
If you want to know your band, visit www.parkers.co.uk/cars/road-tax/ and if you input your make and model it will calculate your tax charge. Unfortunately there's no clever way around this tax. You could sell your car and buy a greener one, but the cost would be enormous. Watters says: "The depreciation is so huge when you drive away from the showroom, that you'd be better off sticking with your more expensive model and spending more money every year." Added to that, if you have a family, how exactly is it going to work if you trade down to a mini or Citroen C1?
Nicky is resigned to the fact she will have to pay this additional tax. "What else can I do, suddenly pull £15,000 out of thin air to pay for a new car? Those that can't afford to buy a greener car will have to fork out for these stealth taxes and enjoy a lesser quality of life."
It's just one of many attacks on the drivers of family cars, who are lambasted by public officials for not being able to take their two kids and a dog on a camping holiday for a fortnight using public transport alone.
These political punchbags faced a further blow in the budget, with the announcement of another 2p on fuel duty in October, 1.84p in 2009 and 0.5p a litre above inflation in 2010. People who have no other choice are now looking at increased running costs of between £350 and £1,500 for a family car, according to figures from the AA. Even on conservative estimates it takes the annual cost of running a family car to £5,000.
If you live in central London, you'll already be paying more than £500 on top of this for parking, congestion charges and higher insurance.
If you have a real gas-guzzler, like a Porsche Cayenne or Range Rover, meanwhile, the new charges will have absolutely no impact at all. Patrick King, tax principal at MacIntyre Hudson, the accountancy firm, comments: "This was an obvious money-spinner for the allegedly "green chancellor" but, as with the usual rhetoric, will have very little effect. The chancellor has piled on the cost of a gas-guzzler in the showroom, arguing that raising vehicle excise duty to £950 in the first year will influence consumers' purchasing decisions. In reality, Top Gear-inspired motorists or Chelsea-tractor lovers will simply factor this into the cost of purchase. Paying only £455 each year thereafter is hardly going to stop those who can stretch to a Porsche."
So why is the government bothering, if it's not going to have any impact on the scourge of the roads? Further inspection of the Budget small print reveals all. The car tax changes will earn around £735 million extra a year for the Treasury, which is a good enough reason for them to ring the changes regardless. As Nicky says: "This has nothing to do with trying to cut emissions, it's about making money."
Useful links:
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View