UK drops plans to tax company cars

Government's green credentials take another blow as tax office advises against

A plan mooted by UK finance minister Gordon Brown in March to green the taxation of company-owned cars is set to be abandoned, according to UK press reports today, which have been confirmed by the official tax office. As part of the 1998 budget announcement, Mr Brown said that he was considering taxing private use of company cars to remove an incentive unavailable to private car owners. According to the tax office, submissions it has received suggest that such a tax would create extra bureaucracy for businesses and would also fail to deliver environmental benefits. Instead of encouraging people to use public transport, it could lead them to buy another car for private use that is of poorer quality and less well maintained than their company car, a spokesperson for the office told ENDS Daily. However, he insisted that no final decision had yet been made and that other options were being considered to deliver a "positive environmental effect". Reports in several UK newspapers today described the move as a second setback for the government's green credentials in a week. On Tuesday, key elements of deputy prime minister John Prescott's plans to make transport more sustainable failed to appear in the government's legislative programme for the year ahead (ENDS Daily 25 November).

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