Road tax: Storm over 'cynical' changes

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MOTORING and taxpayer groups reacted with anger today as it became known just how much extra many drivers will have to find to pay for road tax changes.

The Government has admitted that some 43% of road users will see their bills rise by up to 245 by April 2010, compared with fewer than a fifth who will be better off in real terms.

Treasury Minister Angela Eagle said that overall in 2009/10, "a third of cars will be better off in real terms and, in total, approximately 55% of cars will be no worse off". Just over 44% will pay more.

By 2010/11, 9.4 million face higher bills – 43% of the predicted number of vehicles on the road. Some 8.4 million will fork out around the same, while 1.4 million are set to benefit financially.

Experts calculate that the Exchequer will have received more than 1 billion in extra vehicle excise duty (VED) revenue by 2011.

The AA said the figures "confirm our worst fears", while shadow chancellor George Osborne accused Prime Minister Gordon Brown of misleading Parliament over the car tax information.

The Liberal Democrats said the Government must have "a death wish", while RAC Foundation said it was "shocking" that the Treasury had taken so long to acknowledge the full impact of the changes, which were first announced in the last Budget.

The TaxPayers' Alliance said the VED rates were "a cynical tax grab" but Friends of the Earth said the Government should "stand firm" over its car tax plans.

Ms Eagle insisted there had been no effort to hide the reforms.

She said: "It is a pretty bad stealth tax, I would say, given all the publicity that is about."

She refused to comment on hints from Justice Secretary Jack Straw that there could be a major climbdown on the road tax reforms, insisting only: "We have set out our stall on the direction of policy."

Currently, the maximum road tax for a vehicle registered between March 2001 and March 2006 is 210.

However, from April 2010 that will increase to 455 for the heaviest polluters.

Vehicles such as Range Rovers and some people carriers emitting more than 255g of CO2 per kilometre will pay up to 440. Cars with smaller engines face a 100 rise.

Mr Osborne said: "Gordon Brown appears to have misled Parliament. He said that the majority of drivers would benefit from the changes to VED.

"Now even the Treasury have admitted that just a third of drivers will be better off in 2009, dropping to less than 20% in 2010. This destroys the Government's defence that this is a green tax, and in general gives green taxes a bad name.

"We need the Prime Minister to tell us whether he knew that he was giving Parliament the wrong information and was treating the public like fools, or was it the case that he didn't know the truth about the impact of his own Budget on families?"

Liberal Democrat transport spokesman Norman Baker said: "This Government must have a death wish. It is wrong in principle to tax behaviour retrospectively. Green taxes should be about influencing behaviour not penalising decisions made up to seven years ago.

"New green taxes must be offset by tax cuts elsewhere. The Government has failed on both counts and is giving green taxes a bad name. Eventually we should cut car taxes and introduce road charges on a pay-as-you-go basis that will not penalise those with no option but to drive."

AA president Edmund King said: "The Treasury has made a mistake and must now scrap the 'retrospective' nature of the tax disc changes for older vehicles. 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."

Sheila Rainger, of the RAC Foundation, said: "It is shocking that the Treasury has taken so long to acknowledge the full impact of these Budget changes.

"Nine million motorists will be worse off under the new scheme. Drivers of very modest cars will be hit by increases, which, added to soaring fuel prices, will plunge family budgets into the red.

"Far from being a green tax, this scheme will take 1.2 billion off the motorist and put it in the Treasury's coffers. The Chancellor must think again."

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

"But we do believe people should be given a helping hand. We are calling on ministers to help people switch to a cleaner vehicle by paying them to scrap their old gas-guzzlers and replace it with a greener car that uses less fuel.

"Ministers must stand firm on their VED plans and do more to encourage greener travel."

Matthew Elliott, chief executive at the TaxPayers' Alliance, said: "This is a cynical tax grab that will hit millions of families hard.

"People need their cars to get to work, to visit family and to get to the shops, especially in the countryside. Wrapping this attempt to squeeze yet more money out of hard-pressed taxpayers in the green banner is wrong and deceitful."