Page last updated at 14:34 GMT, Wednesday, 30 April 2008 15:34 UK

Budget car tax rise 'not hidden'

Cars on the motorway
The government wants to reduce CO2 from cars by a third by 2030

The government has denied claims it concealed the full extent of changes in car tax set out in this year's Budget.

Chancellor Alistair Darling announced in March he wanted to encourage manufacturers to produce cleaner cars.

But he did not say explicitly owners of the most polluting cars registered after March 2001 would have to pay more than £400 in tax from next year.

The Conservatives accused the Treasury of "duplicity". The AA said more should have been done to explain the changes.

In his Budget speech, Mr Darling set out "a major reform to Vehicle Excise Duty" (VED) which he said would "encourage manufacturers to produce cleaner cars".

And he said by introducing new bands of tax there would be "an incentive to encourage drivers to choose the least polluting car."

This hits hundreds of thousands of drivers and the worst hit are low-income families who simply can't afford to change cars regularly
Justine Greening
Shadow treasury minister

He also said it was "right that if people choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost."

However, he did not say explicitly higher charges would apply to anyone who bought a car from 1 March 2001.

Shadow treasury minister Justine Greening said the government had "broken yet another promise" by backdating the CO2 charge seven years.

"This is duplicity from the Treasury who deliberately failed to make any mention of this tax grab at the time of the Budget."

She added: "This hits hundreds of thousands of drivers and the worst hit are low-income families who simply can't afford to change cars regularly."

New bands

Under the new road tax system, which will come into effect next year, there will be 13 bands ranging from A to M. Vehicles will be classed based on carbon emissions.

The top band - band M - will be for those vehicles which emit more than 255g of carbon dioxide per kilometre (CO2/km) driven. They will pay £440 in tax.

The second-highest band - Band L - is for cars emitting between 226g and 255g of CO2/km. They will pay £415.

But a spokesman for the AA said drivers were "totally confused" and that the government should have done more to explain the changes to motorists.

However, a spokesman for Prime Minister Gordon Brown told reporters at a daily briefing the Treasury press notice issued on the day of the Budget had "made it clear that the changes to VED related to all new and existing cars".

There had also been a table in the Budget document setting out what the old and new rates were, he said.

A Treasury spokeswoman added that under the Budget nearly half of new car buyers and a third of existing drivers would be better off.


SEE ALSO
New tax changes explained
03 Apr 08 |  Business
Darling puts up car and drink tax
12 Mar 08 |  UK Politics
Gas guzzlers set to face £950 tax
12 Mar 08 |  Business

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