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Diesel tax hike under consideration by Department for Transport

Transport secretary Patrick McLoughlin suggests that previous tax breaks on diesel could be reversed

Words ByJimi Beckwith

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The reduced taxes that currently apply to diesel car ownership could soon be a thing of the past, according to transport secretary Patrick McLoughlin.

Talking to the London Evening Standard, McLoughlin said reversing the takes breaks is β€œsomething the Chancellor will need to look at in due course”.

Diesel drivers currently pay less fuel duty at the pumps. The fuel duty cuts were introduced in 2001 and the tax breaks were introduced to encourage people into diesel cars.

Since then, with the ongoing emissions scandal has brought the drawbacks of diesel cars and the exhaust gases they produce into the public eye, and MPs have acknowledged that, in hindsight, the cut in fuel duty was ill-advised.

McLoughlin stopped short of condemning the tax breaks introduced in 200. β€œIn fairness they [the government at the time] thought they were doing the right thing," he said. "The consequences of what they did was to bring about a reduction in carbon dioxide.”

Despite the emissions scandal’s predicted effect on diesel sales, the latest industry figures reveal a buoyant market for diesels, with sales in May rising 5.0% over the same month in 2015.

The Society of Motor Manufacturers & Traders (SMMT) wouldn’t speculate on whether the move would harm diesel car sales, but it’s likely that sales of alternatively fuelled vehicles such as electric cars, hybrids and hydrogen fuel-cell cars would rise even more sharply – it’s currently the fastest growing segment in the car market.

Tamzen Isacsson, SMMT Director of Communications and International said: β€œDemand for diesel cars in the UK remains very strong with registrations in May up 5% - ahead of the overall market’s growth. British consumers still favour the latest diesel vehicles for their efficiency, performance and lower CO2 emissions, and the latest Euro 6 technology is helping to significantly reduce emissions.”

London Mayor Sadiq Khan is also said to be mulling over an additional charge for cars, vans and lorries in Central London which contribute to the level of pollution in the city centre.

The Department for Transport couldn’t give further details on the tax changes being considered, but offered the following statement: β€œAs the Secretary of State made clear, improving the UK’s air quality and cutting NOx emissions is a priority for this government. That is why we have committed more than Β£2billion for greener transport schemes since 2011 as part of our air quality strategy, with Β£600m over this parliament to support the uptake of electric cars. We are also investing in public transport, such as the Elizabeth Line, to help make journeys cleaner and greener.”.

If the idea goes any further, as a tax issue it will be dealt with by the treasury, so we’d expect to hear more when the chancellor gives his autumn statement, later this year.

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