The first year rate of Vehicle Excise Duty (VED) for new diesel cars should be raised by up to £800 to help reduce emissions, according to Policy Exchange.
The think tank is proposing HM Treasury increase the first year VED rate for new diesels to reflect the greater air pollution caused, in a bid to encourage people to buy lower emission alternatives such as petrol, hybrid or electric cars, instead. Based on a 50% decrease in diesel car sales, the increase in VED would raise around £500 million a year in additional taxes.
A study launched in January as part of a response to the VW ‘dieselgate’ scandal, found that a large number of diesel vehicles were breaking official emissions limits, despite actually following testing processes.
Richard Howard, head of environment and energy at Policy Exchange, said: “Air pollution is overwhelmingly a diesel problem. The CO2 advantage of diesels has now been eliminated with data from the Society of Motor Manufacturers and Traders showing that, in 2013, CO2 emissions from new petrol cars were lower than those of diesel cars (on a sales-weighted basis).
“Euro 5 diesel cars sold as recently as 2014 perform no better in terms of NOx emissions than Euro 1 diesels sold in the 1990s. Despite this, Government policies continue to promote diesel vehicles. Consequently, diesel cars have increased from 14% of the car fleet in Britain in 2001, to 36% today. While the latest Euro 6 diesel cars show some improvement over Euro 5, on average they still emit six times more NOx than the latest petrol vehicles.”
A diesel scrappage scheme is also being proposed to provide grants for drivers who trade in their old diesel car or van for a lower emission vehicle.
In 2010, a £400 million scrappage scheme was launched, which involved the Government giving a £1,000 grant to the owner of an older vehicle when it was traded in for a new car, with the car manufacturer also contributing £1,000. However, Policy Exchange suggests the whole grant for older diesel vehicle scrappage should come from car manufacturers “given that the manufacturer is at fault for creating polluting diesels in the first place”.
AA’s head of roads and transport policy Paul Watters said: “We wouldn’t support an increase in VED. Overall air pollution is actually falling – yes, there are hot spots of about eight to 10 cities, but these cities are looking at measures to reduce the problem – it’s not just vehicle pollutants.