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Global lobby group says high taxes on company cars will cut fuel emissions

New research suggests heavier taxes should be applied to company cars and diesel in order to combat CO2 emissions and increasing congestion on the roads.

New findings by the Organisation for Economic Cooperation and Development (OECD) that higher taxes will go some way to combating the ever-growing problem of air pollution and overburdened roads in the UK.

The study concluded the under-taxing of cars was equivalent to an average subsidy of £1,260 per car, every year. This subsidy varies depending on the country analysed, with Canada the lowest at just £45 and Belgium the highest, with a massive £2,178 per car.

The UK fell somewhere between in the OECD research, with an average annual subsidy of £880 per vehicle.

Estimates for the combined cost of subsidising these cars across the 28 countries considered is the same as more than £21 billion in foregone tax revenues in 2012. Because of this, the OECD is urging governments and global decision makers to consider policy changes and help understand key issues.

Environmental Director of OECD, Simon Upton has said:

‘The environmental and social costs of car use – air pollution and congestion, for example – are not well reflected in the costs of driving.

‘Those problems are made even worse when countries subsidise the purchase and use of company cars. These subsidies mean more cars are purchased and they are more heavily used than [they] would otherwise be.’

He urged governments to tax commercial vehicles more heavily, keeping in mind the damage cars are currently inflicting on society by producing greenhouse gases.

The report suggests the cost of repairing damage inflicted by cars on the environment, in aggravating health problems, increasing congestion and causing road accidents – to name just a few – could cost the countries involved in the study over £90 billion each year.

The organisation has brought particular attention to employees who enjoy economic benefits in using their vehicles. They make savings in fixed costs of taxes, registration and insurance that they would otherwise be expected to pay, as well as the benefits of the variable costs of fuel which are difficult to pin down, and easy to claim for fraudulently.


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