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RAC warns against green car tax hikes

  • Green cars could affect fuel duty revenue
  • RAC says Government should not hit green cars
  • Transport secretary says issue is a long way off
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The RAC Foundation has warned the Government not to raise taxes on green cars even if it means the Treasury takes a hit on revenues.

While the issue is not a serious problem for the Government yet just 1500 electric vehicles were registered by the end of last year the RAC has called on the Government to decide on a long-term strategy. The foundation wants clarity on whether the Government will raise taxes on green cars if revenue from duty collected on petrol- and diesel-fuelled cars starts to fall.

Professor Stephen Glaister, director of the RAC Foundation, said: 'At some stage a point will be reached when the Government is likely to either start putting up tax on green fuels or the Treasury must accept a cut in its income.

'Clearly, this is not going to be an overnight problem, but it will have to be tackled sooner or later. Given that there are real doubts that the price of battery-powered cars will fall significantly because of the high cost of raw materials drivers are likely to be unhappy with anything that increases their day-to-day outgoings.'

However, transport secretary Philip Hammond says the falling tax revenue issue is not high on his agenda.

Speaking to whatcar.com last year he said the question of taxing low- or zero-carbon vehicles 'is not for this parliament, the next one or even the one after that.'

Highlighting the current low running costs of electric cars, the RAC Foundation said at last year's Future Car Challenge, that electric car drivers spent an average of 3p per mile on fuel on the Brighton to London journey, while hybrid drivers spent 7p and diesel car drivers spent 9p.