David Cracknell, Political Editor
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MOTORISTS are facing a fresh squeeze from Alistair Darling, the chancellor, with a one-off £2,000 tax on 4x4s and the most polluting cars, a leaked Treasury paper has revealed.
The new “purchase tax” would have to be paid when a luxury car, such as a Range Rover or top-of-the-range BMW, is bought at the showroom. In subsequent years owners would pay the top rate for their road tax disc, which is also set for big rises under the confidential plans.
The document says that although the changes will be “presentationally difficult” for ministers, the measures will “strengthen the environmental signal” and boost the Treasury coffers.
People who opt for the cleanest models, such as the G-Wiz electric or Smart cars, will get a cash boost by being able to claim a £2,000 rebate off the purchase price of the vehicle.
The Treasury paper has been drawn up by officials ahead of next month’s prebudget report, with the changes likely to be implemented in Darling’s first budget in the spring.
The measures will be greeted with alarm by some motorists, who were already bracing themselves for rises in vehicle excise duty (VED) next year.
The Conservatives yesterday accused the government of “hypocrisy” because Treasury ministers have attacked Tory proposals to introduce green taxes for motorists. Last week Andy Burnham, the Treasury chief secretary, criticised the Tories for seeking to raise green taxes to “eyewatering” levels. They also included a “showroom tax”.
The 15-page paper, headlined Options for PBR 07 / Budget 08 and circulated in Whitehall this month, makes clear that Darling plans to make big rises in road tax, either through the one-off purchase tax or raising the levy in various bands of VED.
“Increasing rates at the top end protects revenue and strengthens the environmental signal,” the report states. “Reducing rates at lower end strengthens environmental signal.” However, the report goes on to admit that “under any option emission reductions are small”.
The paper acknowledges that if introducing the higher taxes is successful in making people give up “gas-guzzling” cars it will lead to a loss of about £180m in fuel revenue in five years’ time.
One option is to introduce the £2,000 purchase tax for a newly created top band for vehicles with emission levels of more than 254g of CO2 per km, such as a Range Rover 4.4L V8. The equivalent rebate would be paid to the lowest band, consisting of cars such as the Smart diesel with emissions of less than 100g/km.
Another option outlined in the report would lead to big one-off hikes for all new cars, before reverting to “normal” levels of road tax - although the report shows that the Treasury plans to put these up in the coming years to still higher levels than those already announced.
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A vindictive tax which will have no effect and which totally ignores actual CO2 emissions in favour of a very crude measure.Only reason to not tax the CO2 emissions directly (via fuel tax) is that we already have hideously hight fuel taxes and they do not dare raise them any higher.
Keith Walker, Stafford, UK
Why are the Government so keen to incentivise us to buy cars that are completely useless for doing anything other than potter about city centres with one person aboard - something they dont want us to do at all?
Nigel Humphries, London ,
Just another envy tax. How this can this remotely be seen as a green measure when it has no tie to actual milage driven? If I drive a 2 litre 4x4 once a week I suspect I am contributing significantly less to pollution than my "eco-friendly" neighbour who drives 500 miles each week in her 1.6 litre Ford Ka.
The only fair or remotely balanced way to tax vehicle pollution is to tax the fuel we all use. Not to single out minorities who, for wahtever reason have larger cars. As usual with measures like this the only people who will really suffer will be the little people in the middle. The rich will just brush this aside and continue to barge us all out of the fast lane.
Jim, Edinburgh, UK
Sooooo.....
Some time next year, £2,000 tax will be added to the sale price of a new 'big car', and £2,000 tax deducted from the price of a new 'small car'.
The day that happens, the price of a second-hand 'big car' will rise, and that of a second-hand 'small car' will fall.
If that realisation were to dawn on the car-buying public then, until the tax adjustments come into effect, sales of big cars should be boosted, while sales of small cars should cease.
Sounds rather like another case of the Law of Unintended Consequences...........
Jan Luthman, Buxted, East Sussex
This is not an exercise in being 'green'. It is all about raising revenue for the Government.
What on earth are we doing? Just 30 miles across the channel the french motorist pays a fraction of the taxes that UK motorists do.
Can anyone explain to me why british motorists should be penalised in this way while our neighbours carry on polluting?
Where is the sense in this? Where is the justice?
Peter Ridgway-Davies, Brewood, staffs
A completely idiotic tax which does not take into the equation the amount of miles travelled. A smart diesel will create more co2 (plus those awful diesel particulates) travelling 20k a year, than a 4x4 travelling only 5k a year, and no I don't own a 4x4, just a small car.
Scrap road tax and put it on fuel, the more miles you do the more you pay plus those who don't pay road tax (who own a car) will no longer be criminals.
BUT how does taxing a car more which is already on the road save the environment? It doesn't but the idiots in the govt will have more money to waste!
When will the political parties wake up to the fact that Green taxes are a complete turn off for the electorate! In fact Green issues have become so ever done that they have become utterly boring.
I think it is time to take my University education and 20 years experience abroad and leave this rotten stinking ship to sink
Andrew Davenport, Wellington, UK
People in rural areas to be hit again?
Nite Owl, Ferndown, England
The "up front" justification is poor fuel economy and high carbon dioxide ommission, although they are one and the same. Doubtless the real reasons will be revealed in the fullness of time. Anticipate this proposed legislation will have a negative impact on the second-hand price of say, petrol-engine Range Rovers. These vehicles are really sort after here in Japan, so it's reverse grey import time. Our petrol prices are some 60% of UK prices. Opportunity knocks and the British motorist gets gets kicked in the teeth, again. Thanks a million, Darling.
Andrew Milner, Yokohama, Kanagawa
So once again we see New Labour going after the motorist, despite the statement that "under any option emission reductions are smallâ. In other words, this is just a crude, in-your-face TAX! Mind you, we already have, and have had for many year the hated Vehicle Registration Tax, amounting to about 15% or more of the purchase price, despite this tax being ruled as illegal.
Adrian Ryan, Donegal, Ireland
Tax and waste, good old Labour, true to form. Spain is introducing such graduated purchase taxes from January 2008 but many of the family cars such as the current Ford Focus 1,6 diesel will go down in price. But Spain's intention is that based on the 2006 taxes, the overall collection for new motor vehicles will be the same.
I just cannot see how Labour can get voted in again unless the Tories or the other parties do something very silly.
B J Deller, Marbella, Spain
Once again, just an excuse to raise taxes.
Do they think we're so stupid as to fall for it as a "green" measure ?
Just how practical is a "Smart" car for a family ? Answer, it isn't.
Stan(expat), USA,
Typical Nu-Labour "joined up government!"
Problem, we use to much gasoline.
Their answer, tax various cars different at different rates, complicated and ignores the actual amout of gasoline used.
Logical answer, tax the gasoline directly, system already in place, cost to enact, virtually nothing.
Al Hamilton, Petaluma, USA
Why not just ban the import of thes vehicles into the UK and ban the manufacture of any in the UK.
The manufacturers of the small and low emission cars will no doubt increase the sales price in an attempt to replace the lost revenue of the larger vehicles.
Action needs to be taken, but not just by introducing yet another stealth tax. The Goverment should stand up and take decisive action and not hide behind the problem that they allowed to come about. We have been aware of the problem of the enviroment for 20 years, they failed before and appear to be doing nothing to upset the vopters.
John Knight, Javea, Spain
another tax raising scam, it's not as if the few sales of these hgh power cars actually add much to co2 compared with the vast numbers of mondeos etc. just the usual labour envy. they run around in nice big cars paid or by us. they should tax the real co2 pollution like aircraft.
urban poacher, leith, scotland
About time that the government gave people an incentive to buy electric cars. It was scandalous that they axed the Powershift grant for electric cars several years ago in favour of educating the public instead. It is now obvious that there needs to be a carrot to go with the stick. A £2000 rebate will lead to many more people driving electric cars and will go some way to ending our addiction to oil. I just hope the government keeps its word on this one.
Ralph, London,
Why be wimps? Make the tax £10,000!
oldasiahand, Manila, Philippines
Ludicrous and just another tax grab. People buying the cars will just go abroad and purchase as we all did when cars in UK were more expensive than in Europe
Andrew, London,
Disgusting.
None of these people deserve to be in the jobs they are. They are elected to serve us, and run our country, not decide what we do and don't have the right to buy.
If this kind of stuff goes ahead then I'm leaving the UK. There are still plenty of countries out there not dominated by this Green Communism.
A pox on all their houses, this kind of stuff makes me sick. It's about raisng tax revenue and the politics of envy.
NOTHING else.
Boober, Glasgow, Scotland
Great idea. There is nothing more irritating than hearing a huge 4X4 unneccesarily revving its gluttonous, anti-environment engine behind you as you are stuck in the normal rush hour gridlock. Especially when the driver is normally fat, wearing a lot of gold, smoking and talking on their mobile phone, probably thinking that everyone in a car smaller than their's should be swatted away like gnats or weak lefties. Well, if they are discouraged by the £2000 tax that's good news, at least they'll save enough money for their penis enlargment surgery!
Barney, Liverpool, UK,
Before the screaming starts...
This proposal could be interesting if it is not wrapped up in Cameronesque fudge and makes a genuine difference. Forget the G-Wiz and Smarts, incentivise the lower end of the mass market such as the various 1 litre or small turbodiesels that actually sell to people.
Similarly put a rebate or tax break on hybrids that are worthy of their name, but would fall outside the strictest definitions of low emissions.
it does not have to be a scheme which falls apart at the first hurdle by only pushing the weird and wacky. Put teeth into it which make the average driver who trades down better off.
Roy Ellor, Salford, UK
We'll just nip over to Europe and buy our 4x4's there darling.
Phill Barlow, Wirral, England
does it realy matter how much you charge? if you can afford that type of car it will not matter how much tax is added just ask sir RB and his friends. if you have the money and you want that car hell can freeze over you are going to get it no matter how much tax is added
Ian Porteous, Southampton, Hampshire
A one off "purchase tax" of £2000 for someone prepared to pay £60000 for a Range Rover will have minimal effect.
A £2000 or more road fund tax would be a far better disincentive. This would raise far more tax and ensure that much higher depreciation acted as a further penalty.
A swingeing increase in road fund tax would also encourage the vehicles to be scrapped much sooner and therefore be a far "greener" solution.
AGrant, COLCHESTER, UK
Clueless use of unsupported science to justify an envy tax that will lose the treasury money and provide unproven environmental benefit.
Mark, London, UK
£2,000 extra on a £50,000-ish Range Rover, BMW X5 or Porsche Cayenne is obviously going to be a huge incentive not to buy them. Well done guys, the most you'll do is ensure that 4x4 buyers tick a few less options on the specifications list.
Chris Atkins, Norwich, Norfolk
If you can afford £60K for a Range Rover, you can afford £62K.
If taxpayers subsidise small ecofriendly cars by £2K, the trade will increase the price by £1.5k.
The chinese and Indians will increase carbon output over the next month by 3 times any savings made by the UK over the next 5years by any customers not buying Range Rovers and increased buying of ecofriendlies - ignoring their extra CO2 building costs and battery replacement CO2 costs, of course.It will not save one polar bear and the proposal will be changed, extended and made overcomplicated by the govmt within 6 months if permitted by the EU. It's just tax raising.and ecospin - like HIPS, Alistair Darling is as usefull to the biosphere as he was to Northern Rock depositors.
Alan, Reading, Berkshire
My understanding of green taxes are they should help us to reduce our carbon footprint as a nation by encouraging society to change our behaviours towards being more carbon-neutral. While I appluade the idea of increasing tax for the highest poluting cars, if that money was used in any way other than to reduce the cost of eco-friendly cars, or increase funding for R&D into alternative fuels, this would be nothing but another stealth tax in disguise. The spin placed on this will provide a valuable insight into the still new goverment of Gorden Brown.
Sas Saadat, Reading, UK