Economic Instruments - Charges and taxes

Annual Car Tax - Brief Summary (UK)

Design

The UK was the first Member State that applies a CO₂ based annual tax - a passenger car emitting less than 150g CO₂/km is charged €159, while more polluting cars are charged by an amount increasing incrementally to €246 (cars emitting more than 185 g CO₂/km (CEC, 2002).

The UK will introduce higher vehicle excise duties for the most polluting cars from 2009 as part of reforms announced by the government in its annual budget.  From then, cars that emit more than 255 grams of CO₂ per kilometre will be subject to
a new top rate of tax (ENDS, 2008).

 

Performance

CO₂ emissions from new cars fell by their biggest ever margin in 2008 with the average model now emitting just 158.0g/km - 4.2% less than the 2007 figure and 16.8% down on the 189.8g/km base level in 1997 (SMMT, 2009).

 

The figures, revealed in the Society of Motor Manufacturers and Traders’ (SMMT) annual New Car CO₂ Report, showed that while the number of cars on the road and the distance travelled has increased, their share of total UK emissions continues to fall. Cars now account for just 11.5% of the country’s total CO₂ emissions, largely as a result of new technology, improved fuel consumption rates and better consumer awareness.

 

References

Commission of European Communities, 2002. Taxation of Passengers Cars in the European Union - options for action at national and Community levels.

 

Communication from the Commission to the Council and the European Parliament. COM(2002) 431 Final. Brussels.

 

 ENDS, 2008. UK budget boost for green transport. ENDS Europe DAILY 2503, 12/03/08

 

SMMT (The Society of Motor Manufacturers and Traders Ltd), 2009. New car CO2 emissions fall at fastest rate on record. http://www.smmt.co.uk/articles/article.cfm?articleid=19207

 

Design

The UK was the first Member State that applies a CO₂ based annual tax - a passenger car emitting less than 150g CO₂/km is charged €159, while more polluting cars are charged by an amount increasing incrementally to €246 (cars emitting more than 185 g CO₂/km (CEC, 2002).

The UK will introduce higher vehicle excise duties for the most polluting cars from 2009 as part of reforms announced by the government in its annual budget.  From then, cars that emit more than 255 grams of CO₂ per kilometre will be subject to
a new top rate of tax (ENDS, 2008).

Performance

CO₂ emissions from new cars fell by their biggest ever margin in 2008 with the average model now emitting just 158.0g/km - 4.2% less than the 2007 figure and 16.8% down on the 189.8g/km base level in 1997 (SMMT, 2009).

The figures, revealed in the Society of Motor Manufacturers and Traders’ (SMMT) annual New Car CO₂ Report, showed that while the number of cars on the road and the distance travelled has increased, their share of total UK emissions continues to fall. Cars now account for just 11.5% of the country’s total CO₂ emissions, largely as a result of new technology, improved fuel consumption rates and better consumer awareness.

References

Commission of European Communities, 2002. Taxation of Passengers Cars in the European Union - options for action at national and Community levels.

Communication from the Commission to the Council and the European Parliament. COM(2002) 431 Final. Brussels.

 ENDS, 2008. UK budget boost for green transport. ENDS Europe DAILY 2503, 12/03/08

SMMT (The Society of Motor Manufacturers and Traders Ltd), 2009. New car CO2 emissions fall at fastest rate on record. http://www.smmt.co.uk/articles/article.cfm?articleid=19207

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