MPs call for tougher car tax changes

Government should beef up so-called showroom taxes on new cars to encourage people to buy more environmentally friendly models, MPs have recommended.

During this year’s Budget announcement, Chancellor Alistair Darling announced that first-year rates of Vehicle Excise Duty (VED) would be increased for those with high-emission cars, and reduced for those with low-emission cars.

But the Environmental Audit Committee said there was not a big enough difference between the new VED bands to have a sufficient effect on purchasing decisions.

In a report published on Monday, MPs called on ministers to widen the VED bands and to accelerate the development of cleaner vehicle technology.

Committee chairman Tim Yeo said: “The differentials between high and low carbon cars are still nothing like wide enough to make a big impact in practice.

“According to the Government’s own figures, these changes will only have a very limited impact on the environment. The Treasury must be more ambitious.”

Plans for changes to VED for existing vehicles made sense, MPs said, but they warned that the Treasury must do more to help low-income families, such as introducing a “car scrappage” scheme paying drivers of high-emission cars to trade their vehicles in for more efficient models.

“In all, the Treasury must do far better in communicating the details and benefits of its green tax policies,” Mr Yeo added.

Motoring organisation the AA slammed the report, accusing the committee of being “out of touch with the real world” for agreeing with the principle of changes to VED on existing vehicles.

President Edmund King said: “It is intrinsically unfair and unusual to introduce a new system of taxation that applies to families who have already purchased their vehicles and are unable to sell them.

“This is not sending out a green signal but a mean signal and is penalising many families who cannot afford to change their car.”

But Friends of the Earth urged Government to stand firm on VED changes and do more to encourage green travel.

Transport campaigner Tony Bosworth said: “We’re delighted that the MPs believe that the Government’s car tax changes are right in principle – and that they have urged the Treasury to consider our suggestion of a car scrappage scheme.”

Kate Martin

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