No cars qualify for new zero rate tax band

No cars qualify for new zero rate tax band

	Published : Fri, 24 Mar 2006 11:55 By : David Simms Print this Story

LONDON: Though chancellor Gordon Brown announced in his budget a zero rate of vehicle excise duty for the least polluting vehicles, there are no such vehicles in the country that qualify for the rate.

According to the chancellor's stipulations, a car must achieve a pollution rating of below 100g of carbon dioxide per kilometre on average while being driven to be entitled for the zero rate tax. The two models touted as meeting these specifications are the Honda Insight and the Smart FourTwo diesel model. While Honda Insight is no more under production, DaimlerChrysler markets the left-hand drive diesel version of Smart in Europe and there is no right-hand version of the car, which is preferred by British drivers.

The treasury said the zero rate was introduced in a bid to encourage manufacturers to take up production of greener vehicles. There are seven tax bands, starting from the zero pound to 210 pounds, applicable to four-wheel drives.

All the other green models in the market, significantly the petrol version of Smart, the Toyota Prius, Honda Civic IMA hybrid models and the small cars like Citroen and Daihatsu, do not meet the 100g of carbon dioxide per kilometre stipulation.

Prius comes in the 40-pound-a-year band. Honda plans to introduce its Civic Hybrid model next week, priced at around 16,000 pounds, but this vehicle too will fall in the 40-pounds-a year band.

A spokesperson for DaimlerChrysler said it is coming out with a new model, but it will be too early to say whether it will be a Smart FourTwo diesel with righthand drive.

Some electric cars already enjoy the zero rate status.

It is estimated that some 159 Honda Insights were sold in the country during the period 2001 when it was introduced, and 2005, when it was taken out of production. The owners of these cars will now benefit by way of saving 55 pounds a year on car tax.

Conservatives criticised the chancellor saying the tax breaks are gimmicks that will do nothing to protect the environment.

Chris Grayling, spokesperson for the party on transport, said this is another example of the government saying something about transport and the environment that the small print renders useless.