1:14 pm, March 12, 2008
A MAJOR reform of road tax from next year encouraging drivers to switch to low emission vehicles was announced by Chancellor Alistair Darling, presenting his first budget today.
He also said he was going to postpone next month’s 2p a litre rise in fuel duty until October. There will be a further increase in duty of 0.5p a litre in real terms from 2010.
Road pricing will be examined as the best way to reduce road congestion, said Darling who announced further funding to develop the technology that could underpin national road pricing.
The lowest polluting cars – those emitting less than 130g/km – will pay no road tax for the first year from 2010. Higher polluting cars will pay more.
The Society of Manufacturers and Traders said sales taxes on higher emitting cars have little effect on CO2 emissions and create an unwelcome market distortion. Buyers of new cars with CO2 above 160g/km will have to pay a supplement to VED on first purchase from 2009.
For cars emitting more than 255g/km CO2 this rises to £950 (£455 of which is VED)
‘Since the introduction of CO2-based road tax in 2001, there has been a clear trend towards lower-CO2 new cars,’ said SMMT chief executive Paul Everitt. ‘Encouraging even more buyers to choose models with class-leading emissions should be the priority. We are therefore pleased to see an increase in the number of bands to 13 from 2009.’
A spokesman for Ford said that the company had vehicles, such as the Focus 1.6TDCi, which come in under the 130g/km but believed people would still be driven to buy the cars they need to use, particularly those with large families.
At the very top end of the so-called ‘gas-guzzling, high polluting scale’ manufacturers of expensive vehicles such as Bentley and Maserati, said that their customers would be unlikely to be affected by one-off increases in tax.
AA president Edmund King said the Chancellor had made a sensible decision in delaying the introduction of a 2p rise in fuel prices.
‘This temporary relief should quell any panic at the pumps,’ he said. ‘Two pence might not sound like much but when it is added to the 20p-a-litre increase in pump prices in the last year it could have been the last straw for many motorists and hauliers. If fuel prices remain at records levels in the autumn the increase should be scrapped.’
