Ex-Vauxhall chairman and chief executive Tim Tozer has slammed the Treasury’s proposals for an overhaul of the emissions-related VED structure as being “probably dreamt up quickly on the back of a fag packet” following the election.
Asked about the scheme, which will apply a blanket £140 tax for the second year of ownership for all cars apart from zero-emission models, plus an additional £310 levy of those priced above £40,000, Tozer said: “The SMMT understands this was down to VED not generating sufficient revenue or virtually no tax from new-car sales, that in turn was due to growing sales of lower-emission vehicles. So something had to change.
“After the General Election they had to make statements and decisions and get on with it rapidly. They were probably dreamt up quickly on the back of a fag packet. Something which graduates like a rolling escalator is better than abrupt step-by-step mechanisms that can make you stumble and fall.
In this case, the law of unintended consequences comes into play. You would not want a system to have unpalatable unintended consequences for the wider environment, car companies or dealers. Jaguar-Land Rover, in particular, must be spitting blood, particularly as they were not consulted as an individual company or part of the wider industry.”
The ex-head of Vauxhall, an international retailer veteran before joining General Motors 18 months ago, said there are different opinions within the SMMT about the £40,000 cut-off, particularly among higher-priced premium players, and added: “Do I have any idea if they will succeed or not? I have no idea.”
Paul Philpott, Kia Motors’ UK chief executive, and chairman of the SMMT parliamentary lobby group dealing with the issue, endorsed Tozer’s views. He said: “The industry was surprised and disappointed about no consultation and we are re-engaging with the Treasury on the VED banding issue. There has been huge investment in lower-CO2 vehicles, so having no graduated scheme after year two seems illogical and at odds with a general move towards lower emissions, which has gained momentum. Electric cars, which will be zero-rated, only provide a limited market.”
He claimed it would damage RVs for lower-emission models and reduce the incentive for fleets, particularly larger businesses, to operate cleaner cars, arguing that from the second year of ownership there would be no distinction between hybrids or highly efficient diesel cars or those with 180g/km ratings.
The proposed new VED system comes into place for cars registered from April 2017, with drivers paying up to £2000 in the first year of registration, before either a zero rate for zero-emission vehicles, or £140 per year for every other car, plus a £310 surcharge for cars in years two to five with a list price of more than £40,000.
