Taxation - MPs gear up for car tax reform

Financial Secretary Dawn Primarolo is trying to speed up consultations on reforms of company car taxation, amid clear indications that the government is being dri-ven towards ?green taxation?. She has urged interested parties to make representations by the end of April.

Speed is required because the changes – which involve replacing existing business-mileage discounts with discounts for driving fewer private miles in company cars – will have an impact on a transport White Paper due for publication in early summer.

Deputy prime minister John Prescott, who is also Secretary of State for Transport & the Environment, wants to crack down on cars in particular.

The consultation comes as the Commons? environment, transport and regional affairs committee is about to launch a major inquiry into Green taxation. MPs will ask whether there should be a fundamental shift in taxation from taxes on labour and capital to tax which encourage environmental protection. They also want to know the role of green taxes in achieving the government?s environmental objectives.

MPs will be looking hard at the chancellor?s plan for lower vehicle excise duty on smaller cars, the effect of higher taxes on fuels, and at any other incentives to reduce pollution.