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Last Updated: Wednesday, 12 March 2008, 16:13 GMT
Gas guzzlers set to face 950 tax
Motorway traffic
The government wants to reduce CO2 from cars by a third by 2030
The chancellor has set out new plans to encourage the use of less polluting cars in a bid to tackle climate change.

The most polluting vehicles will face a 950 "showroom" tax that will come into effect from April 2010.

The government is also introducing a new top band for the most polluting vehicles that emit more than 255g of carbon dioxide per kilometre.

Transport is the second-largest source of carbon dioxide emissions in the UK, accounting for 28% of all emissions.

Companies are being encouraged to opt for less polluting vehicles in their corporate fleets, with all but the least polluting vehicles set to face higher tax rates.

Trying to force people out of high-value cars has no environmental merit and will be seen as a smokescreen for revenue-raising
Society of Motor Manufacturers and Traders

However, Daniel Lyons, a tax specialist at Deloitte, said imposing higher taxes on the most polluting cars would make little difference in changing consumer behaviour because the levy was not high enough.

The Society of Motor Manufacturers and Traders was also critical of the plan.

"Introducing what is effectively a sales tax for many new cars is a retrograde step," it said.

"Trying to force people out of high-value cars has no environmental merit and will be seen as a smokescreen for revenue-raising."


The government has previously proposed levying a fuel tax of two pence per litre, but said that it would not come into effect until October, because of recent high energy prices.


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Other environmental measures mentioned in the Budget include plans to introduce legislation to cut the use of free plastic bags given out by retailers unless firms voluntarily make attempts to cut down on their use.

From 2009, unless companies make changes, Mr Darling said legislation would come into effect that could reduce the number of plastic bags in circulation by around 12 billion.

This proposal prompted an angry reaction from The British Retail Consortium (BRC), which said the move was aimed at raising revenue.

It added that the emphasis on carrier bags as a cause of climate change was "outrageous".

Stephen Robertson, director general of the BRC, said: "It's clear the chancellor has huge holes in his accounts and is trying to hide an old-fashioned tax grab behind a bags and alcohol smokescreen."

Detail needed

The latest moves were a disappointment to many environmentalists, who want a different and more radical approach to tackle climate change.

"This budget has avoided making some strong, creative decisions on the environment and falls short in demanding that the private sector plays more of a role in tackling climate change," said Oxfam.

A truly green chancellor would have told the aviation industry their tax subsidies worth billions of pounds are being cancelled

Mr Darling's said his government would look to cut carbon emissions by 80% by 2050 - up from current targets of 60%, but exact details were not provided.

And he said all non-domestic buildings should be "zero carbon" by 2019 - but again precise details were not evident on how this would be achieved.

"Defining what constitutes zero carbon, and how we get there poses major challenges which need to be properly addressed in the consultation," said business group the CBI.

Behaviour change

The government reiterated that it was set to end the Air Passenger Duty (APD) airport tax scheme and substitute it with a tax per flight system from November 2009.

But Mr Darling added that revenue from aviation duty would rise by 10% in the second year of the new tax system.

"A truly green chancellor would have told the aviation industry their tax subsidies worth billions of pounds are being cancelled and the money is being channelled into the railways," said Greenpeace.

"Instead Labour is still committed to more runways, more emissions and more climate change."

And the response from the CBI was similarly negative, saying that the increase in aviation duty would "confirm fears the government sees this as a revenue-raising exercise, rather than as a genuine attempt to change behaviour".

Earlier this month a parliamentary group said the government was not doing enough in terms of green taxes and claimed that the Treasury continually demonstrated "a lack of ambition and imagination".

There has also been some reaction to the chancellor's move to end the 20 pence per litre discount for biofuels from 2010.

Ending the policy - which was introduced to encourage alternative energy - will reap the Treasury about 500m.

Reaction from a car dealer and buyer

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