Wednesday, June 19, 2024

Green motoring causing £13 billion hole

May 16, 2012 by  
Filed under Motoring News

With people being encouraged to go green when it comes to motoring with more incentives being offered to purchase fuel efficient and greener vehicles, it seems that while this will be helping our planet and keeping carbon emission levels down, it will eventually burn what is expected to be a £13 billion hole in the UK’s public finances.

The Institute for Fiscal Studies (IFS) has found that while we carry on purchasing electric or more fuel efficient vehicles that allow us to have tax breaks and spend less on fuel it seems that this will have a large effect on government income.

Commissioned by the RAC Foundation, IFS research suggests that fuel duty which is collected by the exchequer would fall by 1.7 per cent of GDP to 1.1 per cent of GDP 2029, while vehicle excise duty will be down to 0.1 per cent from 0.4 per cent. Meaning a £13 billion loss in revenue.

This may come as a surprise, or maybe not, that while the government put the price down on running greener cars but put the price of fuel at the pumps up, they are expected to face a drought in motoring income tax if they don’t start clawing back their money from somewhere.

It seems to avoid falling into this £13 billion hole, fuel prices are going to have to be pushed up once again if tax prices on some cars are to stay down.


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