Tax bombshell for UK motorists

1997 warnings are beginning to come true

The British motorist faces car tax increases which may see some paying in excess of £400 per year. The tax plans were laid out in the budget report but were not announced in the Chancellors speech. Besides the less than clear statements 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 Conservative party has accused the Treasury of "duplicity". The Automobile Association and the RAC have both 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".

The Budget report says, "From 2009, VED (Vehicle Excise Duty) will be restructured with new bands, based on carbon dioxide so that people gain financially by choosing the car with the best environmental performance in a given group.

"Six new VED bands from 2009-10 - including a new top band (band M) for the most polluting cars that emit more than 255g CO2 per km." Owners of cars which emit more than 255g of carbon dioxide per kilometre will pay £430 duty in 2010 compared to £210 this year. Cars made before 2001 are unaffected [Sky News / BBC].

The ‘stealth taxes’ will be another burden for many families who will have little choice in paying the increased charges. Few will be able to sell the vehicles and even less able to buy a new less polluting car [Budget].

The announcement comes shortly after the Government made a U-turn over its so called 10p tax plan [BBC]. Besides the promise to reimburse families affected by the plan much of the British public may feel that warnings of a tax bombshell outlined by the Conservatives in the 1997 election are beginning to fall.