Greens say false CO2 emission ratings for cars have cost UK €8bn in lost tax revenue

A new report from the Greens in Europe reveals an €8bn loss in tax revenue between 2010 and 2016 due to the gap between real life CO2 emissions from cars and the emissions in lab tests. The report comes in the same week that figures show CO2 emissions from transport continue to rise, and that transport is now the UK’s most polluting sector.

The report analyses revenues from car taxes in eleven EU countries and finds taxes would have been more than €10 billion higher in 2016, if CO2 emission values had been based on real-life values rather than laboratory measures. The analysis shows the UK has experienced one of the biggest losses in tax revenue between 2001 to 2017 based on Vehicle Excise Duty (VED) which graded car tax according to official rather than real-life CO2 emissions and fuel types.

Molly, who is Green spokesperson on tax justice in the European Parliament, said:

“Taxation based on the polluter pays principle has the potential to gear up the transition to a low carbon economy. It can encourage a shift from cars to public transport and active travel. Instead, the shocking loss in potential tax revenue from cars has been matched by an air pollution health crisis in our cities and increasing CO2 emissions driving climate breakdown.”

 “While dieselgate exposed how European car manufacturers ruthlessly used software to cheat on diesel emissions in lab tests, the fault also lies with legislative inaction on the part of the EU, national governments and their authorities.”  

Greens also point to the freeze in fuel tax over the same period, which has resulted in the proportion of tax from fuel tax falling from 1.9% to 1.4% of GDP between 2001 and 2016. The cost in real terms of motoring has fallen by 14% between 1980 and 2014 while the cost of travelling by rail has risen 63% and by bus 58%.

Keith Taylor, Green MEP for the South East, and member of the European Parliament’s Environment and Transport Committees, said:

“Successive Governments have sent transport in Britain completely down the wrong track. Instead of prioritizing building a transport infrastructure fit for the future, since 1980, Labour and the Tories have overseen the soaring cost of bus, coach, and train travel while the cost of car use has continued to drop dramatically. And now, it is the over-reliance on private cars this has engendered that have seen transport become the single biggest contributor to greenhouse gas emissions in the UK.

“This report reveals that had motoring been taxed according to the real cost to our environment and climate, the missing revenue could have been ploughed into building the integrated, modern and affordable public transport systems we so desperately need in towns and cities across the UK.”

The report from the Greens recommends that the most effective taxes for driving down CO2 emissions from transport and encouraging a switch to alternatives to the private car are a combination of energy taxes, a carbon tax and ‘intelligent’ road charging systems.