More tax on gas-guzzling cars

A 15-page paper distributed in Whitehall last month, leaked to the Sunday Times, has suggested considerable increases in road tax. For example, drivers of luxury cars such as Range Rovers or BMWs could be hit with a £2,000 tax.

Furthermore, buyers of mid-range family cars could face an extra bill of hundreds of pounds on their annual road tax bill. Those buying the cleanest models, such as the G-Wiz electric vehicle or Smart cars, would be able to claim £2,000 back. Those purchasing other cars would be unaffected and would pay the usual rates of tax.

The purchase tax may also be imposed on less environmentally unfriendly cars if the proposal is implemented by ministers. However, the document admits that if everyone purchased greener cars, it would cost the Treasury £180 million in lost fuel revenue.

It is believed by treasury officials that the move would encourage drivers to switch to greener alternatives, therefore reducing carbon dioxide emissions. Details of the proposed charges come shortly after a Tory policy group proposed plans to tax high-emission cars, including a ’showroom tax’.

The Conservatives accused Labour of hypocrisy after a Treasury minister said green tax ideas in Zac Goldsmith and John Gummer’s Quality Of Life report for the Tories were unaffordable. The Treasury’s plan to tax new cars was drawn up by officials ahead of this month’s pre-Budget report.

Buyers of band-B cars, which attract a £35 road tax, would have to pay £105. A band-E car, such as a Toyota Avensis, would be taxed £510 in the first year rather than the current rate of £165. A people carrier such as a Renault Espace, which is taxed at £300, would be charged £1,200.

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