Page last updated at 15:06 GMT, Tuesday, 27 May 2008 16:06 UK

Speculation over road tax rethink

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

Speculation is mounting about a rethink of plans to increase road tax after ministers insisted Alistair Darling "is listening" to concerns on the issue.

Business Secretary John Hutton said the chancellor was listening as he had done "recently" on other tax rises, in an apparent reference to the 10p tax row.

And Jack Straw said "if there are going to be decisions announced" they would come in November's pre-Budget report.

The Tories, at least 35 Labour MPs and Greenpeace oppose the road tax rise.

Greenpeace executive director John Sauven said the plan to bring in higher taxes on cars which people have already bought "gives green taxes a bad name".

He said higher road tax for the most polluting cars should only apply to new cars, so people could buy a greener car - rather than being forced to pay for a choice made in the past.

Obviously the chancellor is listening to what people are saying about vehicle excise duty, as he has done on a number of occasions recently about tax rises
John Hutton
Business Secretary

Owners of some of the most polluting cars could face a tax rise of as much as 200 - a move which the Conservatives say will hit poorer drivers the hardest.

Shadow chancellor George Osborne said the government would be "foolish" to go ahead with the plan at a time when "families are feeling the rising cost of living".

He said the Conservatives had consistently opposed the measure and said that "everyone knows" there will have to be a U-turn.

One Labour MP says the government risks alienating "Mondeo man" - the name given in the past to middle-income voters Labour needed to woo if it wanted to defeat the Conservatives

Mr Hutton told BBC Radio 4's Today programme: "Obviously the chancellor is listening to what people are saying about vehicle excise duty, as he has done on a number of occasions recently about tax rises."

Hauliers' protest

He said owners of 24 out of the 30 most popular models would pay less road tax than they do now.

"We're trying to get this balance right, between encouraging choices to go green, but not hammering people," he said.

And Mr Straw, the justice secretary, appeared to hint at a possible rethink, when he was interviewed on BBC Radio 4's The World at One.

He said: "This is not due to come into force until next April and the chancellor and the prime minister have said quite explicitly we are listening to public concerns about this and if there are going to be decisions announced they could be announced in the Autumn statement."

'Biggest challenge'

Meanwhile, in a speech Mr Hutton told the British Antarctic Survey conference in Cambridge, that the only effective way to insulate oil consuming countries from future price rises was energy efficiency and substitution.

He said the need to deal with climate change, plus the surging demand for energy from the emerging economies of Asia, "present the biggest challenge to global energy systems since the oil price rises of the 1970s".

"There are steps that we can and must take to increase the supply of oil in the short to medium term - encouraging greater investment, transparency of data of production and supplies," he said.

"But in the long term the only effective way to insulate ourselves and other oil consuming countries from future oil price spikes is energy efficiency and substitution."

He told the BBC Mr Darling was also "taking into account" protests by hauliers in central London and along the M4 in Wales about the rising cost of fuel.

Lorry drivers say diesel prices topping 120p a litre, plus a planned 2p fuel tax rise, will drive firms out of business. They are demanding an "essential user" duty rebate for HGV drivers.


SEE ALSO
New car tax rates for 2009
27 May 08 |  629
Treasury 'must end fuel tax plan'
22 May 08 |  Business
Tories warn of car tax 'timebomb'
14 May 08 |  UK Politics
Fuel costs force haulier to close
14 Apr 08 |  North East Wales

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