Starting in 2006, buyers of some hybrid vehicles began to receive a hefty tax credit of up to $4,000. This significant tax break is available when buying new vehicles between April 7 this year and March 31 2008, if they have low carbon dioxide emissions. But the credits vary greatly and some very fuel-efficient vehicles still get no credits at all.

At the same time the tax code sanctions $30,000 write-offs for SUVs. This is how it goes: A business owner purchases a $45,000 luxury SUV for use in his business. He could write off $24,000 of the cost under section 179 of the tax code as accelerated depreciation. Then the buyer could write off additional depreciation of the remaining $21,000 under a five-year schedule - 20%, or $4,200, in the first year.

That's a total $28,200 tax write-off in the first year. Obviously, tax breaks for company cars can vary greatly.

A business owner wanting to purchase a Lincoln Town Car would have to live with a $7,660 deduction, one-fourth what he might save by buying a Lincoln Navigator. It would take more than 15 years to recoup the entire cost of the car. Companies can write-off capital expenditure over a number of years by setting it against profits. In the case of company cars, 25 per cent of the reducing balance can be written off each year. Compare that to $30,0000 initial write off for a luxury SUV, it's no wonder the streets are clogged with the giant gas guzzlers.

At the same time, the SUV tax break seems to contradict other national goals, such as improving vehicle fuel efficiency. A more economical fleet would aid two important national goals: reducing U.S. dependence on foreign oil and cutting greenhouse gasses. The huge tax break for SUV's is rationalized as an economic growth incentive to benefit the faltering US auto industry. But not even massive tax breaks can sell these inefficient SUV's in a time of rapidly rising gas prices

In Europe, tax breaks for company cars have became a campaign issue, largely due to Green Party activism. A recent survey in the UK revealed that eight out of 10 companies are now offering employees a choice between a company car and a cash allowance. Between losing tax benefits, and losing favor, it is starting to look like the end of the road for the company car in European business. In the United States, the company car, and increasingly, the company SUV, remains a tax perk for already well paid executives. Maybe with the modest tax incentives and lower operating cost, the hybrids may actually start to win the race as a choice for the next company car.