New car tax system unfair and ineffective (1)

Monica Muscat has every reason to be dissatisfied with the new car taxes because many owners of small family cars will now be subject to pay increased taxes (Penalised For Owning An Older Car, November 20).

Added to Ms Muscat's justified criticism is the astonishing news that the car tax reform made hybrid cars more expensive than vehicles in the same class that pollute more (Hybrid Cars More Expensive After Budget, November 21). There is also no mention on tax concessions on electric cars.

This further reinforces the impression that the new tax structure has been devised by someone who has no grasp of the basic facts relating to vehicle emissions so that that the real situation has been distorted - not only in respect of small cars, but also in regard to other less polluting vehicles.

There also seems to be confusion between carbon dioxide emission and exhaust pollution which needs to be clarified because these are quite distinct from each other:

Carbon dioxide (CO2) is not a pollutant; CO2 emitted by cars is not directly harmful to health. Raised atmospheric CO2 has only recently become a grave cause for concern because we are now emitting much more CO2 than the planet can sustain and, unless we burn less fuel, it will result in the serious consequences of climate change. In terms of climate change, it makes little difference whether a car is old or new. A small car, whether old or new, emits little CO2; it typically emits 100-130 grams of CO2 for every kilometre travelled. By contrast a medium sized car will emit about 200g-250g of CO2 for every kilometre, while a large car will emit as much as 300g-400g of CO2 for every kilometre. So, if climate change is the main issue, small is good irrespective of the age of the car.

Exhaust pollution is a different matter. The pollution caused by our dense traffic poses a serious health hazard.

The most harmful exhaust pollutants are particulates (fine soot emitted especially by diesel engines) and benzene. Both of these are responsible for a number of serious health hazards, the most worrying of which is an increased rate of cancer. Other harmful exhaust pollutants include oxides of nitrogen, sulphur oxides, carbon monoxide, lead and ozone.

The aim of the new vehicle taxes should be to apply the "polluter pays" principle by making fuel-hungry medium-sized and (especially) large cars more expensive (both to buy and to run) and to induce a trend towards ownership of new, smaller, fuel-efficient cars which are less polluting. The new taxation system does not go far enough in doing this because it does not sufficiently deter ownership of larger cars. The new taxes also put an unfair burden on small car owners by slightly raising annual taxes and increasing this as their small car gets older.

This is unfair and socially unjust. Small car owners, who are usually less well-off anyway, should be rewarded for driving a car which emits less CO2, rather than penalised. In respect of exhaust pollution, a small, well-run car, even if it is old does not necessarily pollute more than a large new car.

Also, since older cars must now undergo regular VRT tests, the pollution from small cars should not be significant.

For these many reasons it is unfair to unduly penalise small cars while not sufficiently penalising medium to large cars (which use more fuel and therefore emit more CO2 even when new). The tax system in its present form is unlikely to induce a trend to small car ownership (which would decrease both exhaust pollution and CO2 emission) for the simple reason that the polluter pays principle is largely absent. The tax system is simply not weighted enough against medium-sized or large cars. To make matters worse, owners of small cars have been doubly hit. Besides making it more expensive for them to license their old but cherished small car, they are now saddled with a car which nobody wants to buy.

As to the absurdity of absence of tax incentives on hybrid cars which pollute little for their larger size (even less than a small car), comment is superfluous - the blogs beneath The Times report provide a well-reasoned verdict for our finance ministry to ponder.