Government need to make tax plans clear following Euro 5, says GE

GE Commercial Finance, Fleet Services has repeated a call to the Government to make clear how much the ECís new Euro 5 vehicle emissions standard could influence future UK company car taxation.

The ECís new measures, set to come into effect in 2009, are especially tough on diesel cars with a proposed 80% reduction in diesel particulate emissions over the current Euro 4 standards.

Rich Green, Managing Director at GE Fleet Services, said: Diesel cars are currently accounting for much more than half of all UK fleet sales. The current CO2 based benefit in kind taxation system, which often makes diesels a logical choice, is a key driving factor in this level of popularity.

Euro 5 will be very tough on diesels. It seems to suggest that the thinking at European level is that diesel is more of an environmental problem, especially with the accent the targets place on reducing particulate emissions.

Green added that there was no question that the benefit in kind taxation system had increased the market for diesels but what fleets now needed to know was whether there would be a change in direction.

He said: We are keen for the Government to make its thinking on diesel company car tax clear as soon as possible. This is a request we made when the Euro 5 proposals were announced and we are repeating it now.

Our feeling is that they may come under increasing pressure to dissuade company cars drivers out of diesel cars for environmental reasons. However, neither we nor our customers think that a sudden about face in policy without lengthy consultation and notice would be appropriate.

Green said that the environmental arguments being levelled against diesels were hard to ignore. For example, the World Health Organisation says that there is no safe limit for the larger air polluting diesel particulate matter PM10, such is its threat to air quality.

He said: ìAlthough the CO2 output of diesel engines is often lower than equivalent petrol models, there is some convincing evidence that their overall environmental impact is worse due to particulates and other emissions.

Reducing CO2 levels in the atmosphere is clearly hugely important but it is not the only environmental consideration. The current benefit in kind system for company cars does take a very one sided view of green issues and the question is whether that will continue?

We believe that the Government should make its long-term position clear. Fleets do not want taxation surprises sprung onto them and they would prefer years of notice to deal with the implications of a reversal in tax policy against diesel, especially seeing as the Government has done so much to encourage its popularity.

Headline Euro 5 changes include:

Diesel cars
particulate matter (PM): 5 mg/km (down from 25, or an 80% reduction)
nitrogen oxide (NOx): 200 mg/km (down from 250, or a 20% reduction)

Petrol cars
Hydrocarbons (HC): 75 mg/km (down from 100, or a 25% reduction)
Nitrogen oxide (NOx): 60 mg/km (down from 80, or a 25% reduction)