Apply the brakes on retrospective tax

An incentive to buy greener cars is welcome, but new proposals for vehicle excise duty will only affect those who can't afford an upgrade


Edmund King
guardian.co.uk,
Monday June 30, 2008
Article history
Families who bought certain people carriers in the last few years may soon be hit with a doubling of the cost of their tax disc. The whole credibility of "green" taxes may well be undermined unless the government doe a quick rethink on retrospective vehicle excise duty. The government has been shaken by motoring revolts before. The fuel protests in 2000 were the first real test for the new Blair government and the 1.8 million signatures to the Downing Street website against road pricing put pricing even further back on the back-burner.
The current issue is a mistake that has not been thought through by Treasury officials rather than a "stealth" tax or unfair "green" tax. The principle of taxing vehicles linked to their CO2 performance is not something that I oppose. Indeed, I suggested it to the then chancellor, Gordon Brown, along with green groups a few years ago. What is totally unfair is the threat to double the tax disc for cars that people already own.
Incentives to purchase greener cars are welcome. For older cars the purchase has already been made, so people are just hit with the tax. Partly as a result of these proposed changes, the bottom has fallen out of the used car market with some owners suffering from negative equity. So even if motorists want to sell their older, less green cars, they can't.
There is a problem now with the proliferation of "green taxes". So in Richmond you have to pay up to £450 for a resident's parking permit based on CO2. This is a tax to park your car. In Norwich you have to pay more based on the length of your car. Westminster has concessions for electric cars while the City of London has just dropped its parking incentives. Motorists are confused even if they want to be green – and generally they do.
A recent AA/Populus poll of 17,481 AA members showed that more than 90% would consider taking measures to reduce the overall environmental impact of their cars. It also showed that 62% would consider buying a more fuel efficient car, 60% would consider eco driving and 48% consider cutting out shorter journeys by car.
Drivers are often portrayed as The Wind in the Willows' Mr Toad, but our panel results show that the vast majority of motorists do care about the environment and will consider taking steps to reduce the environmental impact of their cars. A majority of AA members said that the AA should be campaigning to reduce the environmental impact of cars. The purpose of graduated vehicle excise duty was to send out a message to motorists to help influence their vehicle purchase. A "retrospective" tax does not send out such a signal but hits many motorists who cannot afford to change their vehicles. Sometimes a U-turn is better than crashing into a wall. The chancellor should come clean, admit this measure isn't green and apply the brakes.