High C02 Tax May Lead To Mass Scrappage In The UK

A scheme to tax cars based on their C02 output could have the unintended consequence of causing UK motorists to scrap tens of thousands of perfectly good cars in the UK, solely because their annual tax rates, based on C02 consumption, have become too expensive for many motorists.

The increase in tax rates would hit tax brackets L and M hardest – these are typically larger engine luxury, performance and off-road vehicles that emit 226 grams of C02 per 100 km or greater. For comparison, a Toyota Prius would qualify for the “A” band (under 100 grams) and is exempt from paying road tax. A Porsche 911 falls under the highest tariff “L” and “M” bands, depending on the model.

Owners of older vehicles that consume relatively more fuel and produce greater levels of C02 could be looking at annual tax rates that amount to as much as one third of their vehicle’s value. Motorists could be eager to dump these cars, further pushing down their residual values, leading to a situation where numerous vehicles in good working order are sent to the scrap heap for no other reason than high tax rates.

Just-Auto spoke to CAP, a vehicle valuation company, regarding the scenario

“We are now in the crazy situation where perfectly good cars have become uneconomical to own because the cost of taxing them could soon approach half their car’s value.

This means more and more cars will become unsalable and will have to be scrapped long before the end of their useful life. Scrapping serviceable cars for the sake of a tax disc makes a mockery of environmental taxes as owners already tend to limit their mileage because the cars are relatively uneconomical.

Throw in the carbon footprint of building the cars that replace those that are scrapped and the environmental justification for taxing these cars off the road collapses. The government should now consider lowering VED [Vehicle Excise Duty] rates for cars that fall into the brackets L and M after a certain age. This would prevent this potential waste of vehicles that do relatively little harm to the environment but provide cheap and comfortable transport for thousands of hard-pressed motorists in austerity Britain.”