July 11, 2008

The full extent of proposed changes to the Vehicle Excise Duty have come out this week, with an estimated 9.4 million motorists having to pay more road tax in 2010-11 under the reforms.  Cited as an attempt to promote more environmentally conscious behaviour, the reforms have been criticised as a tax grab that targets those least able to afford it.
 
Official estimates say vehicle excise duty will rise for 43% of vehicles made since 2001 - by up to £245 for the most polluting ones - but will fall for 18%.

Gordon Brown’s claims that "the majority of drivers will benefit", now look increasingly hollow as government figures for 2010-11 show that only about a fifth of drivers will be better off, while four-fifths will either pay more car tax or the same level as currently.

The estimates, which were revealed by Treasury minister Angela Eagle, claim that "a third of cars will be better off in real terms, and in total, approximately 55% of cars will be no worse off".
However, it is believed that a little more than 44% - 8.7 million vehicles, all in the six top-polluting bands - will pay more, she added.  For 2010-11, 18% (3.9 million people) will pay less tax, 39% (8.5 million) will see no difference and 43% (9.4 million) will be worse off. It is calculated that the Exchequer will receive more than £1 billion in additional revenue from the scheme by 2011.

The figures that are being banded about by MPs are somewhat misleading as they’re not focussing on the amount of an increase per car, per family for their cars.  If the government is looking to 9.4 million motorists to stump up £1 billion extra between 2009 and 2011, what is the cost implication to the unwary motorist, the person who purchased the car before regulations were drawn up and then retrospectively introduced?

Ms Eagle also acquiesced that five of the UK's 30 most popular cars would pay more - the 2.2l diesel Land Rover Freelander, the 1.6l unleaded Toyota Auris, the 2.2l diesel Honda CR-V, the 1.8l unleaded Vauxhall Vectra and the 1.6l unleaded Vauxhall Zafira.

The government have been criticised since it's u-turn to include any vehicle made since March 2001 has made many vehicles prohibitively expensive to run and therefore worthless on the used market, meaning that less affluent families will be unable to afford to run their cars, or be able to find a buyer for it.

AA president Edmund King said the changes were "politically dangerous" with high petrol prices already pushing up the cost of motoring.  He said the new figures confirmed its "worst fears".

If the government was able, or moreover willing to commit to spending the funds on improving the UK’s road network many motorists would feel more understanding of the proposals.  However as our earlier report - Motorists hit in new tax raid stated, the motorist already contributes four times more to the chancellors coffers than is spent on the roads, so it’s hard to see this changing in any way.  It’s hard to reconcile the government’s alleged green credentials when they don’t even count the emissions of aircraft as part of the total emissions of the UK.

Ken Livingstone effectively staked his job on the congestion charge increase, and is no longer Mayor of London.  Maybe Gordon Brown is sleepwalking into the same trap.

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