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Last Updated: Sunday, 9 March 2008, 12:02 GMT
High CO2 cars targeted by Budget
Motorway traffic
The government wants to reduce CO2 from cars by a third by 2030
Cars that produce large amounts of carbon dioxide (CO2) will be hit by new measures in Wednesday's Budget, according to reports.

Chancellor Alistair Darling is expected to introduce measures to encourage the use of cars with low CO2 emissions.

Weekend newspaper reports say the chancellor might introduce a levy on new, larger cars that could increase their price by 2,000.

The tax would hit new saloons, estates and people carriers, the reports say.

Showroom price

The Sunday Times quotes a Treasury official who says that car buyers will "take more notice" of a charge that directly affects the car's showroom price rather than the existing incentives based on road tax.

At the moment, cars that produce fewer than 100 grams of CO2 per kilometre do not pay road tax.

The charge is on a sliding scale that runs up to 300 a year for cars that produce more than 224 grams per kilometre.

It is thought the chancellor might also adjust those rates to make environmentally friendly cars more attractive.

Fuel duty

Both the Sunday Times and the Observer say the chancellor is likely to accept proposals from a report commissioned by the Treasury from Julia King, the vice-chancellor of Aston University.

Her report urged the government to make the most polluting cars more expensive, by raising their price or running costs.

The chancellor has also announced plans to raise fuel duty by 2p per litre in April.

That move is deeply unpopular with hauliers who have called on the government to scrap the duty increase.

How green taxes are supposed to work

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