The government looks set to maintain increases in vehicle excise duty proposed in the Budget despite backbench unease.
The ‘green tax’ would see a retrospective charge imposed on many thousands of older models of car.
The changes, introduced in the Budget, would mean that some cars registered before March 2006 will now be subject to increases in vehicle excise duty.
When the top rate of tax was implemented for heavy-emission cars, an exemption was made for those registered between March 2001 and March 2006. However, a new set of 13 duty bands has been introduced, depending on a vehicle’s CO2 emissions, and as part of the new system the exemption on older cars has been removed.
As a result, heavy-emission cars registered between March 2001 and March 2006 could be liable to the new top bands. The change is to take effect as from April of next year.
The worry is that the changes will hit people already having to cope with higher petrol and food costs.
A move to reverse the decision at the report stage of the Finance Bill was defeated in the Commons.
It is thought that the government appeased possible backbench rebels by promising to review the tax rates this autumn, along with the planned 2p per litre rise in fuel duty.
Fuel prices at the pump have increased by 20 per cent since last October, and business groups have been urging the government not to implement the next hike in fuel duty.
Angela Eagle, the Treasury minister, argued that fuel duty had fallen in real terms since 1999 by 16 per cent. A rise in line with inflation over the same period would have seen the duty climb to 61p per litre instead of its present 50.35p per litre.
Date:3 July 2008
|
