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Diesel Scrappage Scheme Funded by New £800 'Diesel' Tax Proposed


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Diesel Scrappage Scheme Funded by New £800 'Diesel' Tax Proposed

A new diesel scrappage scheme could be introduced following calls from a Government think-tank that has proposed a new £800 first-year tax rate for all new diesel cars that will fund the programme. 

In April, 2009, a scrap car scheme was put in place to encourage owners who owned their vehicles for more than 12 months and which were older than 10 years to trade it in their car for a new and more efficient model.

The Government paid £1,000 towards a discount on a new car and a car manufacturer had to fork out a further £1,000 too resulting in a £2,000 saving for the owner. The scheme was to support the replacement of 300,000 vehicles and was extended in September, 2009 and February, 2010 before finishing at the end of March, 2010.

Now a think-tank – called the Policy Exchange – an educational charity whose mission is to ‘develop and promote new policy ideas which deliver better public services, a stronger society and more dynamic economy’ – wants the Government to introduce a scrappage scheme solely for diesel cars.

It says this can be funded by increasing the first year’s vehicle excise duty (VED) on new diesel cars to £800. The Policy Exchange believes that this will decrease sales of new diesel cars by 50 per cent and encourage customers to choose petrol, hybrid, electric or LPG models over diesel ones instead.

The Head of Environment and Energy at the Policy Exchange think-tank, Richard Howard, has outlined that this could raise £500million each year to fund the diesel scrappage scheme.

According to its research, diesels account for 36 per cent of all cars on UK roads today – up from 14 per cent in 2001 - an increase of 157 per cent.

The nitrogen dioxide from diesel cars is blamed for thousands of deaths in the UK every year. There have been reports that the proposed £800 tax hike could be part of Chancellor George Osborne’s Budget this Thursday.

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