Summer Budget: ACFO questions Osbourne's proposed VED plans
08 July 2015
There has been a lukewarm response to Chancellor George Osbourne's plans for VED reform from car fleet operators association ACFO.
"Reform of Vehicle Excise Duty was always a possibility as it was obvious that under the current system, Government revenue would decline as more low emission and ultra-low emission cars were purchased," said chairman John Pryor. "The changes to first year VED rates are therefore understandable as they continue to incentivise the uptake of the 'cleanest' cars from an emission standpoint.
Pryor described the standard £140 rate for all cars apart from zero emission models and those priced above £40,000 as "less easily understood".
"Successive government has remained focused on driving down vehicle emissions and improving air quality," continued the ACFO chairman.
"Therefore, a standard rate of VED during a vehicle's lifetime except in the first year of ownership appears not to be in tune with such a philosophy. ACFO believes that it is equally important to encourage second owners to drive low emission cars and therefore would favour a graduated standard rate of VED."
Increasing Insurance Premium Tax from 6% to 9.5% was a measure described by ACFO as "extremely penal in respect of vehicle insurance," as it's a legal requirement.
"Unlike some other insurance policies, where consumers have a choice as to whether they opt for insurance or not, the law dictates that all vehicles must be insured," added Pryor. "ACFO fears that such an iniquitous increase in respect of vehicle insurance could herald a rise in the number of uninsured drivers on the UK roads."