NEWS RELEASE - March 8th 1999

Colin Howden, Campaign Manager of TRANSform Scotland, said:
"Tax breaks for company car drivers currently favour those who drive furthest - a reward for those who help create our traffic jams. Congestion is recognised by businesses and environmentalists as damaging to the economy and the environment. This tax incentive directly undermines the Government's aim of traffic reduction, and must be reformed."

The cross-party Environment Audit Committee (Fourth Report, February 1999) has recently called on the Chancellor to eliminate "perverse" tax incentives for company car users to drive more miles, and to remove disincentives for employers to introduce green commuter plans. TRANSform Scotland is keen to see what the Chancellor can offer to encourage 'green commuting' projects.

Colin Howden continued:
"We also hope that the Chancellor will close one of the key loopholes in John Prescott's transport policies and introduce a national charge on out-of-town car parking spaces. Only through a charge of this type can we reverse the drift to out-of-town shopping and give vital support to traditional high street retailers."

ENDS - Notes attached

Notes to Editors:

TRANSform Scotland brings together 51 organisations - including transport operators, local authorities, national environment campaigns & local transport groups - interested in transport, the environment and a sustainable Scotland. We can be contacted at 72 Newhaven Road, Edinburgh, EH6 5QG. Tel.: 0131-467-7714; Fax: 0131-554-8656; Email: campaigns@transformscotland.org.uk; web: http://www.transformscotland.org.uk

The current situation:
Drivers of company cars pay less tax if they drive more than 2,500 miles on business. The tax bill decreases again if they exceed 18,000 business miles in a year. There is therefore a strong incentive for company car drivers to make unnecessary business journeys, and to drive rather than use public transport.

At the March 1998 Budget the government announced a consultation process on changes to company car tax which would base the tax on private mileage instead of business mileage.

What we would like:
(1) Drivers to pay less tax if they drive less than 14,000 private miles
(2) Drivers' tax bill to decrease still further if they drive less than 5,000 private miles per year. Private mileage includes commuting but excludes journeys on company business.

These recommendations are based on research by our sister organisation Transport 2000, which commissioned a report ('Winners and Losers: Company Car Tax Reform', available from Transport 2000 on 0171-388-8386) which concluded that these measures could reduce traffic by at least 5.4 billion miles per year.

What we expect to see:
It is thought that the Budget may include a scheme for discounts for less polluting, 'cleaner', company cars. While welcome in itself, and would give fleet managers more incentive to choose efficient cars, this would not be the complete reform to company car taxation outlined above.

Current situation:
Many employers are considering implementing green commuter plans to cut car travel to their sites. The plans are packages of measures designed to provide reliable alternatives to car commuting for staff and can include car sharing, guaranteed taxi rides home, better cycle facilities or improved or subsidised bus services.

Unfortunately, many of the measures that could encourage staff to leave their cars at home are treated by the Inland Revenue as taxable benefits. Either the company then has to pick up the tax bill or employees pay a tax charge for using the works bus instead of driving to work. The tax calculations are also very complicated and so can add significant administrative burden on companies. Many companies are not implementing green commuter plans because of the cost and complexity of the tax.

What we would like:
(1) Exemptions from tax for specific measures that are of low value and are currently administratively complex to tax, such as staff buses and bicycle loans;
(2) A tax concession for other green travel measures provided by employers such as public transport subsidies, up to a value of £500. This is close to the current concession for interest free loans, and is also similar to new tax concession rules in the USA.

What we expect to see:
We expect to see some measures introduced - perhaps support for staff buses.

The current situation:
The Royal Commission on Environmental Pollution in its 1994 report on Transport recommended 9% annual increases in fuel prices in real terms for a decade so that road users pay at the point of use for the costs they impose on the economy, the environment and society. While increasing fuel prices is essential to make car use pay its way, there is concern at the impact on remote "deep rural" areas that may be genuinely car dependent.

The Chancellor has already announced that reform to Vehicle Excise Duty ("road tax") will be introduced, reducing VED for more fuel efficient vehicles.

What we would like:
A reshaping of the Government's 'Fuel Duty Strategy' so that fuel use in congested, polluted urban areas is better targeted. We recommend the use of an Urban Area Fuel Surcharge. While the Fuel Duty Escalator has been successful in raising the price of road fuel its tax impact is regressive, unnecessarily penalising deep rural area that may be genuinely car dependent. The Urban Area Fuel Surcharge has been shown to work well in Vancouver in Canada, being easy to collect and having been shown not to distort petrol purchase patterns: more information is available on request.

Ideally, we would like to see VED scrapped and passed on to fuel prices in a fiscally-neutral manner as this would be better targeted towards reducing car mileage.

What we expect to see:
A continuation of the 'Fuel Duty Escalator' (the annual increase in petrol prices above inflation) at 6%, despite the 'special pleading' of the roads lobby.

We also expect to see a reshaping of VED to give discounts to smaller-engined cars that produce less carbon dioxide (to help the UK's commitment to reducing climate change emissions).

Current situation:
Excessive parking provision, particularly at major out-of-town developments, leads to excessive traffic and reduces the viability of alternative transport provision. Councils currently have no effective means of reducing the amount of existing parking.

A local authority parking tax would encourage companies to remove parking spaces while also raising funds for councils to pay for rail, bus and cycling facilities. A parking tax with a national element would provide a universal incentive to reduce parking spaces, so deterring car use across the country.

The Government included plans for a tax on workplace parking in its Transport White Papers launched in July 1998. However, the measures do not go far enough as they do nothing to tackle the continued erosion of the vitality of town centres by major car-based out-of-town developments. In addition, as workplace car parking would only be taxes on a local discretionary basis, most councils are unlikely to introduce such a tax for fear of driving development to neighbouring authorities: hence a national tax is needed instead.

What we would like:
(1) Introduction of a national tax on both workplace and customer parking spaces.
(2) A commitment to introducing legislation to allow local authorities to implement a tax on workplace parking, as outlined in the White Paper.
(3) A commitment to extending local authority powers to allow a tax to also be applied on customer parking at retail and leisure outlets.

What we expect:
Disappointingly little!

END OF PRESS RELEASE