Road tax increases to affect ‘9 million’

10 July 2008

The government has conceded that as many as 9 million motorists could be affected by planned changes in vehicle excise duty.

Angela Eagle, the Treasury Minister, has said that overall in 2009/10 “a third of cars will be better off in real terms and, in total, approximately 55 per cent of cars will be no worse off”.

However, the tax on 44 per cent of cars will rise, with some charges climbing by as much as £245 in 2010.

As they stand, the changes to the road tax system will impose increases on 8.7 million vehicles next year, all of which will be in the six most-polluting bands.

In the following year, 9.4 million cars will be paying higher taxes. It is estimated that about 8.4 million vehicles will experience no rise, while 1.4 million owners should gain from the new charges.

The changes, introduced in the Budget, would mean that some cars registered before March 2006 will now be subject to increases in vehicle excise duty.

When the top rate of tax was implemented for heavy-emission cars, an exemption was made for those registered between March 2001 and March 2006. However, a new set of 13 duty bands has been introduced, depending on a vehicle’s CO2 emissions, and as part of the new system the exemption on older cars has been removed.

As a result, heavy-emission cars registered between March 2001 and March 2006 could be liable to the new top bands. The change is to take effect as from April of next year.

Edmund King, president of the AA, called on the Treasury to scrap the ‘retrospective’ nature of the tax disc changes for older vehicles.

Mr King said: “This is not a green tax but a mean tax that will hit millions of hard-up families. Coupled with the record pump prices this will bring double misery to millions of motorists.”

However, Ms Eagle, who was answering questions from the environmental audit committee, denied that the new system was a form of stealth taxation.

She argued: “I would just say that there are much simpler, easier ways of raising revenue if we were interested in doing that. It is a pretty bad stealth tax I would say, given all the publicity that is about.”

The government has insisted that the tax is aimed at reducing pollution rather than raising extra revenue.

Simon Bullock, economics co-ordinator at Friends of the Earth, said: “Upping VED on old, very polluting cars will encourage people to choose greener vehicles, cut fuel bills and lower carbon dioxide emissions.”

A Treasury spokesman added: “As we have consistency made clear, while more polluting vehicles will face higher charges, under the new bands of VED the majority of motorist will be better or no worse off.”