The Chancellor could use the Budget to close a £126 million tax loophole that benefits highly polluting vehicles, according to technology firm Dearman. Such a move could bring in enough money to employ 5,700 nurses while reducing pollution.
The loophole benefits an estimated 26,000 cold delivery trucks that have two engines – the main engine propelling the truck, and a second engine keeping the back compartment cold.
While main engines are subject to increasingly tough Euro emission standards, weaker regulation for second engines means they can emit almost 30 times as much dangerous pollution as main engines.
A tax loophole means second engines are also allowed to use Treasury-subsidised diesel on public roads. Known as red diesel, this has historically been used only by agricultural and non-road vehicles. Dearman says its analysis shows the amount used by cold delivery trucks is estimated to be worth £126 million.
The UK’s 84,000 cold delivery vehicles – including the 26,000 with two engines- are estimated to cause as much pollution as 3.8 million Euro 6 diesel cars.
Reports have suggested the Chancellor may use next week’s Budget to increase taxes on diesel car drivers. The Treasury’s subsidising of cheap diesel for highly polluting engines is likely to be seen as unfair by car drivers facing greater taxes to tackle pollution.
The subsidy makes diesel cheaper than zero emission technologies and disincentivises their uptake. Meanwhile, the NHS is having to cope with thousands of patients suffering health complaints caused or made worse by toxic air.
In his Spring Budget earlier this year, the Chancellor announced a consultation on red diesel use in urban areas. This has raised the potential of removing the red diesel subsidy for cold delivery trucks.
Scott Mac Meekin, CEO of Dearman said:
“Reports that the Chancellor might announce new diesel car taxes in the Budget will not go down well with drivers, especially when they see the Treasury subsidising cheap diesel for highly polluting second engines used in trucks.
“The Budget is an opportunity to make our tax system fairer, to encourage the development of British technology, to reduce pollution and invest money into a health service dealing with the impacts of toxic air. The Chancellor should close the £126 million tax loophole and end cheap diesel for polluting delivery trucks.”
