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Tax Allowances: Motor Vehicles

Volume 470: debated on Tuesday 8 January 2008

To ask the Chancellor of the Exchequer if he will introduce a fiscally-neutral scheme to (a) reward and (b) penalise manufacturers of motor vehicles according to vehicle (i) fuel efficiency and (ii) carbon dioxide emissions. (172307)

The Government have reformed Vehicle Excise Duty to provide fiscal incentives to consumers to choose lower emissions vehicles by introducing CO2 emissions graduated rates for cars, a discount rate for early registered lower emissions vans and discount rates for reduced pollution buses and heavy good vehicles. Budget 2007 changes to Vehicle Excise Duty built on 2006 reforms, further sharpening the environmental signals to motorists to purchase more fuel-efficient vehicles and supporting development of the low-carbon market. The Government have also reformed Company Car Tax to provide further fiscal incentives for cleaner lower emissions choices.

In addition the UK will engage fully in negotiations on the European Commission’s proposal to set vehicle manufacturers mandatory targets to reduce average CO2 emissions from new cars. The Chancellor keeps all taxation policy under review as part of the Budget process.