Source · Select Committees · Environmental Audit Committee
Recommendation 36
36
Paragraph: 227
To support the accelerated uptake of ultra-low emission cars in the UK, further tax incentives...
Conclusion
To support the accelerated uptake of ultra-low emission cars in the UK, further tax incentives should be introduced to make these vehicles more affordable. Where current environmental taxes, such as Air Passenger Duty, are blunt in their effect, the Chancellor should consider fine-tuning them to reward and incentivise investment in cleaner, more efficient, low-emission technology.
Paragraph Reference:
227
Government Response
Acknowledged
HM Government
Acknowledged
Transport is the largest emitting sector, responsible for 27% of all greenhouse gas emissions in the UK, and road transport accounts for the majority of these emissions. The Government therefore uses the tax system to encourage the uptake of vehicles with low carbon dioxide emissions to help meet out legally binding climate change targets. Zero emission cars and electric vans have no Vehicle Excise Duty liability, and users of zero and ultra-low emission cars will continue to benefit from favourable company car tax rates compared to conventionally fuelled vehicles until 2024–25. The Government has also been applying a nil-rate of tax to zero-emission vans within the van benefit charge from April 2021, to incentivise the uptake of zero emission vans. The Government keeps all of these taxes under review and has to balance environmental objectives with simplicity and fairness within taxes, whilst ensuring the sustainability of the public finances over the longer term. Once the economic recovery is secured, the Government will take the necessary steps to ensure the public finances are on a sustainable path. More widely, the Government has committed £1.88 billion for plug-in grants and electric vehicle charging infrastructure to support the transition to zero emission vehicles and has also committed to publishing a Green Paper on the UK’s post-EU emissions regulations this year. Air Passenger Duty’s (APD) primary objective is to ensure that the aviation sector makes a fair contribution to the public finances, since tickets are VAT free and aviation fuel incurs no duty. The Government is currently consulting on how APD could be reformed to support Union and regional connectivity, and the UK’s commitment to reach net zero emissions by 2050, while maintaining the sector’s contribution to the public finances.