Some 'environment-friendly' budget measures are socially unjust (1)

Some budget changes in respect of taxation on private transport are self-defeating and skewed against the less well-off.

The new Vehicle Registration Tax should be based on the universally accepted principle of lowering registration tax and annual license fees for (small) low CO2 emission cars while increasing the price and annual road tax of large (high CO2 emission) cars, with the object of reducing pollution and carbon emissions. By today's environmental standards, a low CO2 emission car would be a small car of around 1,200cc capacity or even less (or a hybrid/electric car). A 2,000cc car is already in the high CO2 emission range and correspondingly more polluting.

It is therefore paradoxical that registration tax for powerful cars with engines in the 1500 - 2500cc range has now actually been decreased, rather than the opposite. This is absurd. Surely the underlying "polluter pays" principle should have been more rigorously applied in the case of motor vehicles with capacities higher than 1500cc? After all, people who can afford a large car, which pollutes more than a small car, should be made to pay more for the privilege of driving a large car. There is anyway little justification for powerful cars on our little island. As things now stand, the budget actually favours purchase of medium-sized and large cars by virtue of a reduction of registration tax for so-called "middle-range" cars between 1500cc-2500cc. This simply does not make sense.

As to getting old cars off the road, there is no dispute that it is reasonable, and environmentally desirable to discourage ownership of old cars. However increasing annual licence fees for cars older than seven years old is socially unjust because this puts the less well-off (and old age pensioners!) at a disadvantage. It is precisely such people who tend to keep their vehicle longer for the simple reason that they cannot afford a new vehicle. These less well-off owners of old cars have now been doubly hit - besides being subjected to escalating road tax and eventually being obliged to sell their car, they are now unable to get a fair price for their (often carefully tended) old car when it comes to trading it in to buy a new car.

In view of the forgoing, it is only fair to introduce measures aimed at bringing purchase of (new) small cars nearer the reach of owners of old cars who are now being unjustly hammered for keeping their car for a long time. The correct way would have been to reduce still further the registration tax on smaller cars of less than 1300cc; leave unaltered the tax on larger cars between 1300cc and 1500cc capacity and progressively increase the registration on cars over 2000cc and raise it to a very high level on cars of 3000cc and above. As things now stand, the reduction of registration fees on small (low-CO2 emission) cars does not sufficiently ease the burden of replacement of old vehicles by the less well-off. This is unfair and is the wrong way to approach the problem because it gives an undue advantage to the purchasers of larger cars.

One must also consider that owners of small cars generally use them sparingly, and often walk or use public transport to economise on fuel whenever possible. The proposed emissions tax will penalise the cost-conscious and/or environment-aware individual who buy small cars and use them carefully, because it is based on the age of the car and not the use. In its present format this tax is not socially equitable and goes diametrically opposite to the polluter-pays principle. A suggestion would be to exempt old cars of 1300cc or less from the proposed increase in road tax.

The question of social impacts of environmental measures is covered in paragraphs 257-266 of the report, Towards A Low Carbon Society, The Nation's Health, Energy Security And Fossil Fuels recently published by The Institute of Public Policy (TPPI). Attention is particularly drawn to para 264 which states, inter alia: "It must be ensured that measures are socially just and ways must be sought to even out both benefits and disadvantages (to the less well-off)..." The question of financial deterrents to excessive car use aimed at decreasing pollution and improving health is covered in some detail in paras 342-353 of this report. The approach should be fair; it should also be holistic. Besides tax and financial deterrents, it should include other measures including education, road re-engineering, improvements in public transport and making cycling safer by altering motorists' attitudes.

Reducing the price of cars in the middle- to high- range of CO2 emission is wrong. It does not provide an impetus to the wider use of smaller, less polluting cars and sends the wrong message. It will also lead to a surge in the importation of larger cars in a situation where we already have the highest car density in the world and our roads are saturated to the extent that the efficiency of the whole transport system is now at an all time low.