Will Tax Cuts for Green Cars Really Make a Difference?

The last budget speech saw an boost in car tariff and a 2p rise in fuel costs effective from October 2008. Critics believe that these increases will place a strain on car drivers who are already paying the highest ever prices for fuel, another bone of contention is whether the tariff cuts for greener cars will encourage drivers to consider cleaner transport.

The only excellent news for drivers that came out of the budget changes was that the Chancellor chose to delay to 2p boost on fuel prices until October 2008, but since the cost of fuel is already at an all time high currently at 106.1p per litre.

Ashton Berkhauer, an insurance expert at uSwitch.com said: “The budget announcement may prove a bitter pill to swallow for Britain’s 41.7 million motorists. Only those drivers opting for the smallest amount polluting vehicles, currently representing just 0.2% of all cars on the road will be incentivised.”

The head of insurance.co.uk, Steve Grainger said: “For those who are already stretching to meet petrol prices, October will arrive all too quickly.”

There has been a lot of speculation in recent months that the highest polluting vehicles will initiation to face penalties and environmentally friendly drivers will be rewarded. So the announcement that from 2010 drivers with the most environmentally friendly vehicles will not pay any tariff in their initially year was no surprise. The most polluting vehicles can expect to see an boost in the price of their tariff, Band G vehicles are expected to see an boost of 233% from £300 to £1,000 in the initially year.

Berkhauer said: “Drivers of green vehicles are preeminent off financially. Our investigate shows that eco-friendly car owners currently save £165.40 a year on fuel compared to those driving standard cars. The boost in October will boost this saving to nearly £170 a year.”

“The new proposal could see larger family tree cars, such as the Renault Espace, being subjected to the same tariff as a new Lamborghini Gallardo. An extra £1,000 may be small change to a Lamborghini buyer considering the £126,350 price tag. But, this could be a real strain on an average family tree’s budget.”

It is estimated that Britain’s roads will household 55,900 green cars by the end of 2008, although this only makes up 0.2% of all UK registered vehicles.

Some critics are disappointed that the Chancellor hasn’t done more to encourage green transport. Tescocompare.com’s spokesman Matthew Dransfield said: “We completely support today’s announcement to encourage consumers to be more environmentally conscious when buying a car. But, we are disappointed that the Chancellor did not look wider to the cost barriers for purchasing green cars and consider cutting Insurance Premium Tariff for these cars as an added incentive to go green.”

Car insurance for a green car can cost £50 more than a non-green car of a akin size and with akin features because it costs more to repair green cars. Dransfield clarified: “With the average car insurance premium being £400 – the removal of the 5% insurance premium tariff on ‘green’ cars would make the cost of insuring one equivalent to a akin standard car. Motorists can do a lot to cut their carbon emissions as well as their insurance costs by reducing annual mileage, having their car serviced regularly, regularly checking exhaust pressure and limiting the amount of time spent idling, all of which will boost fuel efficiency and decrease carbon emissions.”

There are a link of car insurers who offer special policies for green vehicles and customer’s attitudes towards green vehicles are changing dramatically meaning that more insurers will need to offer reasonable policy prices for green vehicles.

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