Government revenue down as drivers go green

Over the coming week, the Government is expected to announce a fuel duty increase of 3p per litre.

But independent research by CAP has revealed a significant loss in revenue from the automotive manufacturing segment.

With the government offering healthy benefits to those who downsize to smaller, greener, more efficient cars, it is estimated that income from fuel duty and VAT has dropped by almost a fifth while VED revenues have decreased by almost two thirds.
Exclusive analysis by CAP reveals that today's most popular cars would have delivered 18 per cent less in fuel duty and VAT, and a massive 58 per centless in VED revenues over the past three years than the equivalent models that were registered in 2009.

This drop in income isn't likely to have gone unnoticed, and industry experts are urging motorists to pay careful attention to the chancellor's autumn statement on December 5 to see if the Government has found a way to reverse the decline.

Using September's top-selling car – the Ford Fiesta – as an example, owners would have saved £250 in road tax and £222 in fuel duty and VAT over the last three years - had the newer model been for sale in 2009.

CAP Automotive Intelligence Services, which advises major organisations on automotive business strategy, said: "The only realistic areas the Government can look at to fully address this problem are; taxing the fuel, taxing the car and taxing road use.

"However, taxing fuel is partially self-defeating because motorists tend to respond by using less, as we have seen over the past couple of years and taxing the roads is going to be political nightmare.

"There is, of course, already a tax on car ownership but the problem is that by encouraging the take-up of more 'environmentally friendly' cars the average VED paid will collapse, as we've already seen."
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