Government to review car tax plan

Following the revelation yesterday that the Prime Minister 'mis-spoke' when he said in Parliament that the majority of drivers would benefit from proposed car tax changes, Chancellor Alistair Darling has appeared in Parliament this morning to answer questions about the plans.

Finally confirming what other ministers and backbench MPs had already been pushing for, he indicated that the plan will be reviewed before the Pre-Budget Report, due in the Autumn.

Official estimates given yesterday to Conservative shadow Treasury minister Justine Greening in a Parliamentary answer revealed that vehicle excise duty will rise for 44% of vehicles made since 2001 - by up to £245 for the most polluting ones - but will fall for 33%.

An estimated nine million car users would have to pay more under the reforms.

Answering for the Treasury, Angela Eagle MP also admitted that five of the UK's 30 most popular cars would pay more.

So if you drive a 2.2l diesel Land Rover Freelander, a 1.6l unleaded Toyota Auris, a 2.2l diesel Honda CR-V, a 1.8l unleaded Vauxhall Vectra or a 1.6l unleaded Vauxhall Zafira, prepare for a wallet-bashing.

Most interestingly, the government's difficulties with getting the plan through Parliament seem to be greater than first envisaged.

Complaints from Labour backbenchers don't just seem to relate to the backdating of the changes to older cars made after March 2001 - thought to be the most contentious part of the proposals.

Speaking on the BBC News channel, Martin Salter - far from among the most rebellious of Labour MPs - complained that even "two years" was not enough time to give people a chance to change their car-buying behaviour.

This would suggest that the government faces problems getting the proposals through Parliament if they make the changes applicable to anything other than brand new cars.

But then, that would mean people are given a chance to dodge the higher charges by making alternative choices, and make the proposals actually 'green' - rather than the great fundraiser for the Treasury that they are actually designed to be.

What a dilemma, Darling!

UK fuel cheapest in Europe without taxes

According to a recent Evening Standard report, fuel in Britain would be the cheapest in western Europe if it wasn't for taxes piled on top by the government.

Official figures published by Business Secretary John Hutton show that Britain has the cheapest diesel in western Europe once taxes are excluded, with unleaded petrol being the second cheapest.

The revelations expose the fallacy of the prevailing view that nothing can be done about high fuel prices because of the rising price of oil - a piece of government spin that's increasingly being retailed by the mainstream media.

In reality, factors under direct control of the government such as the huge percentage of the retail price that is down to fuel duty and VAT could affect the price we pay at the pump a great deal, and do much to ease the pain being suffered by hauliers and car users struggling to pay their fuel bills.

Consumer fuel prices have rocketed in recent months as the cost of oil spirals. While fuel duty has remained the same at 50.3p per litre, the government has profited from the extra VAT on the increased prices.

Yet the government remains disinterested in giving any of that extra cash back to ease the growing burden on car users.

Chancellor Alistair Darling has signalled that he may postpone the 2p fuel duty rise due in October, but hauliers are demanding a 25p a litre rebate and a government struggling to maintain popularity should more seriously consider actually cutting duty.

The AA has called for the tax on fuel to be published at forecourts so drivers can keep track of how much we're paying the Treasury, which sounds an extremely sensible idea and one way that fuel companies could extricate themselves from the blame for higher prices.

'Green' car tax changes a fundraiser, Treasury admits

Whoops, what a giveaway! And how often is that said on the day after Budget day?

But buried in the small print of yesterday's Budget was an official admission that changes to the car tax system, being spun as having 'green' objectives, will in fact be a healthy fundraiser for the Treasury.

The Treasury has said that by 2010-11, when the six additional car tax bands and the up to £950 graduated ‘showroom tax’ on cars in the upper tax bands come into force, higher vehicle excise duties will be delivering an extra £735m to the government’s coffers.

When the tax on lower emissions cars is also set to go down, the fact that tax income is projected to increase by such a huge amount rather indicates that Alistair Darling himself knows that the changes will not remotely encourage people to switch to less polluting cars.

Probably because, as we all know, many people actually need larger cars to accommodate their families and aren’t just driving them out of perversity or for their own entertainment.

So here we have confirmation from the horse's mouth that these car tax changes are not a ‘green’ move at all, but a way of milking more money from the already over-burdened car user. And what a surprise .... they did it anyway!

Coupled with the news that the fuel tax increase (albeit delayed til October) will be contributing an additional £270m to the Treasury by 2010, and that the government will announce the results of its investigations into how to hit car users with yet more bills via road charging next year, it’s no wonder this Budget has been described as 'Darling's war on the family car'.