Money News
With the announcement by Alistair Darling of new bands for vehicle excise duty, based on their various CO2 emissions, Patrick King, tax principal at MacIntyre Hudson, the accountancy firm, makes the point that this is an obvious money-spinner for the allegedly 'green Chancellor' but, as with the usual rhetoric, will have very little effect.
The Chancellor has piled on the cost of a gas-guzzler in the showroom, arguing that raising vehicle excise duty to £950 in the first year will influence consumers' purchasing decisions. In reality, 'Top Gear' inspired motorists or Chelsea-tractor lovers will simply factor this into the cost of purchase. Paying only £455 each year thereafter is hardly going to stop those who can stretch to a Porsche, argues Hudson.
"The Chancellor would not dare risk public wrath by doing anything that would genuinely change motorists' behaviour - it would simply be too unpopular. Recent research from MacIntyre Hudson has found that 68% of motorists object to any further rise in vehicle excise duty, even though they will happily pay lip-service to the idea of green taxes. (Much like the Chancellor himself.)," he adds.
"All in all, the voting public still comes ahead of the environment, as is clear from Darling's sympathetic six month delay to increasing fuel duty in the wake of sky-high petrol prices."
In a surprise move, the Chancellor failed to unveil a windfall tax on energy companies, but has promised to auction carbon credit in the next phase of the EU emissions trading scheme.
King says the Chancellor's decision is surprising given that disgruntled public opinion and the bumper profits of energy companies would have made this an easy raid. At least taking a carrot-and-stick approach to raising social tariffs will benefit the consumer, rather than lining the Treasury's purse.
"The recent barrage of criticism about energy prices is justified only in relation to the price of carbon - but this is a conundrum entirely of the Government's own making. The energy regulator has recently spoken out against how energy companies sell electricity at a price which includes the cost of the carbon credit, even though these have largely been allocated for free by the Government.
"Auctioning carbon credits under the next phase of the emissions trading scheme seals off this extraordinary anomaly which has, until now, resulted in an excess profit borne by the already squeezed consumer," concludes King.
13 March 2008 © Moneyextra.com
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