Tax breaks for the rich

Posted on December 12th, 2014 by Rob Marshall

porscheThe more new cars that appear, which emit almost impossibly teensy quantities of carbon dioxide, the more I think that the gas is not a suitable means upon which to base our car tax system, particularly as carmakers have optimised their vehicles to perform well in the not-so-realistic standardised, European emissions and fuel economy laboratory tests. Yet, not so long ago, eco-cars might have been slow and ugly but at least the taxman awarded you with a low (or zero) tax band, as a means of compensating the owner for such a woeful box of misery.

Car manufacturers have become smarter and the cost of annual road tax (even though one is not provided with a disc to display anymore) has become such a powerful selling tool, that virtually every maker has tuned their latest models to comply with the lab tests.

Porsche is playing the game too. Its latest Panamera S E-Hybrid (pictured) has joined the ranks of super-saloons but it cannot be described as anything less than an engineering masterpiece. With a 3.0-litre V6 petrol engine, allied to an electric support unit, it can develop 416bhp, go from 0-60mph in 5.2 seconds and has a 167mph top speed. Yet, it has also achieved 91mpg and emissions of 71g/km in the lab tests. It is a true triumph for Teutonic engineering and yet, its brilliance makes a mockery of the current tax system. Whoever said that the Germans had no sense of humour?

Under the current rules, the Panamera’s ‘eco-credentials’ mean that the buyer will receive a £5,000 subsidy, financed from you and me, the British taxpayer, towards his (or her) new Porker, although, admittedly, it will make only a little dent in the £89,000 asking price. At least the Exchequer will make some money on the VAT paid but not much else, because the owner will be exempt from paying not only the London Congestion Charge scheme but also the annual VED bill.

Compared to more real-world models, the owner of a ten years-old Volkswagen Polo 1.4-litre petrol automatic would be faced with a £225 annual VED demand, plus a daily £11.50 charge, to enter the capital. How is this fair, compared to the sophisticated supercar that pays zero for both? Porsche has, cleverly, underscored the utter stupidity our annual vehicle excise duty being based upon laboratory methods that are unrealistic to real-world conditions.

The little Volkswagen will, indeed, produce more pollutants from its tailpipe (although I suspect the Porsche’s real-world CO2 figures will not be far behind) but some road-testers (see here and here) have reported real-world fuel consumption of the Panamera S E-Hybrid to hover in the low to mid-30’s, compared to the Official Combined figure of over 91mpg, thus making it likely that the considerably lighter Volkswagen might be able to go further on a gallon of petrol, in everyday conditions.

Furthermore, as the technology filters down into more humdrum models, I wonder how long environmental legislators can justify the ecological costs of meeting the raw material demands of these complicated hybrid and battery systems, more about which is detailed here, here. It all seems rather unbalanced to me.