MPs criticise new road tax plans for older cars

A parliamentary committee has cast doubt on the government's plans to introduce higher levels of road tax for some cars registered up to seven years ago.

Government plans to charge more road tax for more-polluting vehicles have been received as a 'step in the right direction' by the Environmental Audit Committee, but the 'Vehicle Excise Duty as an environmental tax' report by the committee also cast doubt on the benefit to the environment.

A breakaway report criticised the new road tax plans as amounting to retrospective taxation, as they will mean a rise in road tax - also known as VED - for older cars that could have been bought since 2001. Critics say that such a tax cannot discourage drivers from buying gas-guzzling vehicles.

Conservative MP Tim Yeo, who heads the committee, said that second-hand cars needed to be subject to a green tax, as three-quarters of all car sales in the UK are second-hand. The report also recommended a system of paying drivers to scrap polluting vehicles.

Yeo also concluded that the road tax changes would have little positive environmental impact.

However, Liberal Democrat MP Jo Swinson, one of the authors of the critical breakaway report, said: "The public must have faith that green taxes are not about raising revenue for the Treasury, but in this case, their use is clearly more to do with filling Alistair Darling's coffers than cutting carbon emissions from our roads."

The government says that under the new road tax bands 55 per cent of vehicles will be subject to higher rates, while 33 per cent will pay less. Other official estimates say vehicle excise duty will rise for 43% of vehicles made since 2001, but will fall for 18%.

The changes will mean that bands will range from A to M, with owners of A-band vehicles eventually paying nothing, but owners of heavy-polluting M-band cars paying £455 by 2010-11.

The Treasury says the new plans would save 1.3m tonnes of CO2 by 2020.

The RAC Foundation said it supported the graduated scheme of vehicle excise duty, but said it should only be for new cars.

• Read our guide to the new road tax changes.

Budget 2008: New road tax bands

A list of the new road tax bands as described in the 2008 budget. Cars are placed in VED bands acording to the amount of carbon dioxide emitted by the vehicle.

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