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ACFO COMMENT ON THE 2006 BUDGET “The reform of Vehicle Excise Duty, which penalises high CO2-emitting vehicles and rewards people driving more environmentally-friendly vehicles seems sensible and rational in light of concerns over the level of CO2 emissions.” ACFO, the leading UK representative body for fleet operators said in its post-Budget statement: “The reform of Vehicle Excise Duty, which penalises high CO2-emitting vehicles and rewards people driving more environmentally-friendly vehicles seems sensible and rational in light of concerns over the level of CO2 emissions.” Stewart Whyte, a director of ACFO said: “However, by removing some motorists from the VED charge and reducing the tax for many others, the Chancellor appears to be signalling a sharp reduction in the fiscal importance of VED. “The Government has consistently spoken about introducing road charging on a national basis. The changes in VED announced today (Wednesday, March 22) could amount to the first moves towards the eventual phasing out of VED as a tax, and its replacement by pay-as-you-go motoring.” Mr Whyte added: “Generally, it is a broadly neutral budget for the fleet industry with no major changes. However, the further tightening of company car tax in 2008-09 is a minor disappointment. “It is clear that vehicle manufacturers are having some difficulty in driving through the technological changes that will see a significant rise in the number of very low CO2-emitting cars on sale. We hope that all parties will work together to ensure that the typical company car becomes much more fuel- and CO2-efficient - and therefore tax-efficient - so that the impact on drivers of the tax change is neutral. “We cannot have a company car tax system which takes no account of the technical realities of the vehicles available and, as a result, penalises company car drivers through no fault of their own.” Mr Whyte concluded: “ACFO will in the next few days be digesting both the consultation document on modernising corporation tax relief on company cars and the newly-launched report that evaluates the 2002 company car tax reforms. Once we have an informed view, we will respond to HM Revenue and Customs.”
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