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LUC to bite back at Budget taxes

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Review

Alongside the laws of physics which rule our everyday lives, there is one that has a particular affect on the fleet industry – the Law of Unintended Consequences.

While Newton's Law of Gravitation is very specific – drop something and it falls to the ground – the LUC is a bit of a wild card. Make a decision with a specific outcome in mind, but LUC ensures that the result is either completely different or produces an unexpected additional results that send your entire plan into chaos.

Company car tax provides a perfect example of the LUC in action. Green-minded ministers created the comp-any car tax regime to encourage drivers into smaller, cleaner company cars, by penalising emissions. But at the same time, they were concerned about diesel emissions and the use of older technology.

Fast-forward a few years and sales of diesel cars have rocketed while, according to research from the Association of Car Fleet Operators, drivers opting out of company cars are choosing older, dirtier and less environmentally-friendly vehicles than if they had retained their company transport.

The law can be summed up by the equation: gross generalisation, multiplied by bad planning and divided by independent thinking equals chaos.

When Chancellor of the Exchequer Gordon Brown prepared his Budget speech, the LUC was foremost in his mind. His massive reworking of company van taxation that had experts warning about doubling tax bills. The intention is to encourage the use of newer, cleaner vehicles and discourage unnecessary private mileage. But the LUC guaranteed that even if the result was as expected, fleet drivers and managers would make a host of unexpected changes to their fleets that could wipe out any benefits.

So instead, Brown's changes take 85% of drivers out of the benefit-in-kind tax regime for vans altogether – slashing administration and offering a financial boost to key voters for the next election.

Brown may think his Budget, which froze most taxes, is enough to ensure he is Mr Popular with company car and van drivers, but as always, the LUC will create a very different result.

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