Fleet observers have welcomed vehicle excise duty cuts announced in the 2006 Budget, but say fee hikes on new "gas guzzlers" will not deter buyers.
The government has revised vehicle excise duty charges with effect from 23 March. Vehicle excise duty will now not be payable on vehicles with carbon dioxide emissions below 100g/km. Drivers of these CO2 band A vehicles will save £65 a year.
By contrast, drivers of vehicles with emissions above 226g/km face a new band G charge of £210 per annum, an increase of £45. Under the graduated duty scheme, there will be cuts for grades A to C, a frozen fee for grades D and E, and duty increases for bands F and the new band, G. Under the changes, 50% of drivers face a reduced or unchanged duty charge.
Tony Leigh, head of car fleet services at PricewaterhouseCoopers, which has 3,650 drivers in its car scheme, predicted little impact. "It’s a move in the right direction although I’m not sure it’s going to make people go for lower-emission vehicles."
Francesca Smith, associate director of Momentum Consultancy Services at Lex Vehicle Leasing, questioned the practicality of the lowest threshold, stating that even hybrid cars such as the Toyota Prius failed to qualify for free excise duty, with a CO2 output of 104g/km.
The government is also encouraging organisations to adopt greener fleets.
For 2008-09, vehicles with emissions below 120g/km will be taxed for benefit-in-kind at a lower 10% rate, while the 15% charge rate threshold will be tightened from 140g/km to 135g/km.