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<p>The Government currently uses the tax system to encourage the uptake of vehicles
with low carbon dioxide emissions to help meet our legally binding climate change
targets. This is why zero emission cars and electric vans are liable to pay no Vehicle
Excise Duty (VED), and why users of zero and ultra-low emission cars have favourable
company car tax (CCT) rates in comparison to conventionally fuelled vehicles.</p><p>
</p><p>The Net Zero Review interim report published by HM Treasury in December last
year highlighted that structural changes in the economy related to net zero will have
fiscal implications. Much of the revenue from fossil fuel-based taxes is likely to
be eroded during the transition to a net zero economy. However, there is currently
a high level of uncertainty regarding the rate at which receipts decline.</p><p> </p><p>As
the UK moves forward with the transition away from petrol and diesel cars and vans,
the Government will need to ensure that revenue from motoring taxes keeps pace with
this change, so that the Government can continue to fund the first-class public services
and infrastructure that people and families across the UK expect. Any changes to the
tax system will be considered by the Chancellor and any further steps will be announced
in due course.</p>
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