Written by Kunal Sawhney, CEO, Kalkine Media
The government’s historic step towards climate control and transition to zero-emission cars and vans by 2030 has again come under fire with the introduction of new increased car tax changes from 1 April 2022. Vehicle Excise Duty (VED), which is calculated using the vehicle’s age and CO2 emissions, has increased drastically in line with the Retail Price Index measure of inflation.
Households that are already struggling with the cost-of-living crisis will face one of the biggest rises in car tax when fuel remains at a record high, despite some decline due to the US release of oil from its strategic reserve.
Vehicle Excise Duty (VED) and its implications
The UK car owners have to pay car taxes Vehicle Excise Duty (VED), which is made up of two components: The first-year rate and the standard rate. When one buys a car or van, he has to pay a tax known as the first-year tax or the showroom tax. It depends on the CO2 emission figures when the vehicle was built.
The other component of VED is the standard tax, which the car owner has to pay annually, and its calculation is done by keeping the vehicle’s age and CO2 emissions into consideration. All those cars and vans with bigger and older engines that usually produce more CO2 are bound to be levied higher taxes, while it could be zero if the car doesn’t emit CO2.
As per the regulations, those cars producing emissions between 1 and 50g of CO2 per kilometre are liable to pay £165 and a first-year rate of £10, while cars emitting 51 to 75g of CO2 per km will have to pay £165 and first-year rate of £120, and so on.
Electric Vehicles exempt from VED
At the same time, electric vehicle (EV) owners don’t have to pay any standard rate, and this has become a major issue when the VED, which is popularly known as the road car tax, has risen for the majority of drivers. It is being said that electric vehicle users’ use of roads in the UK is being subsidised by other taxpayers.
Electric Vehicles have gained popularity in the last sometime in the UK, with the data showing a constant rise in registration for EVs. However, people are still concerned about range anxiety despite huge developments in battery manufacturing. Also, the availability of charging stations, the long charging time of batteries, and most importantly, the high upfront cost of the EVs have been restricting the transition from traditional fossil fuel cars to EVs. However, their benefits too can’t be ignored as they will not only lead to the government’s goal of zero-emission vehicles but will also create jobs and deliver public health benefits by improving air quality, and over half of the Britons would consider adopting an EV if it was available at a right price for them.
Course of action
It’s true that EVs don’t produce CO2 or exhaust fumes, but it is also a proven fact that they produce large amounts of tiny pollution particles from brake and tyre dust, which has been linked with cardiopulmonary toxicity and can result in serious illness.
Putting the tax burden on those who cannot afford to transition will only add to the woes of the households when the energy cap has gone up by 54 per cent, National Insurance rates are rising, and inflation is at its peak. The number of vehicles needs to be reduced from the roads and mass transit system to be expanded, not just the CO2 level of cars and vans with the forced mass adoption of zero-emission vehicles.