"The Daily Telegraph has learnt that government officials have begun private discussions with the motoring industry and drivers’ groups about an overhaul of the Vehicle Excise Duty (VED) rules.
The talks come as ministers try to prevent a fall in tax revenues as more motorists choose smaller, cleaner cars that incur a lower rate of duty. Labour has accused the Coalition of planning a “stealth tax” on drivers, effectively punishing them for going green.
Ministers say that while they have not finalised their plans, changes may be necessary to ensure the “sustainability of the public finances”.
One option being considered would replace the annual tax on cars with a one-off up-front charge on new vehicles when they are sold.
Chloe Smith, a Treasury minister, told the Commons last week that ministers are “considering whether Vehicle Excise Duty should be reformed to support the sustainability of public finances and to reflect the improvements in vehicle fuel efficiency”. As part of that process, motoring groups and other interested parties have been invited into the Treasury to discuss potential changes to VED.
One source involved in the discussions said ministers have made it clear that the consultation will lead to higher tax rates on some motorists.
“Revenues are under threat and it’s pretty clear that the Treasury needs to do something to increase its tax take or face losing a lot of money,” the source said.
Annual road tax for cars ranges from zero for those with the lowest CO2 emissions — which include electric and hybrid cars — to more than £200 for those with larger and less efficient petrol and diesel engines.
VED raises almost £6 billion a year for the Treasury, but official forecasts show that the revenue from the tax will fall as more people chose to drive low-emission cars.
Road tax rules give drivers a financial incentive to choose low-emission vehicles, as cleaner cars qualify for lower rates of VED.
Low-emission models like the Toyota Prius or the Nissan Leaf attract a zero rate of VED.
Cars in Band E face a £135 charge, and include some models of the VW Passat and the Nissan Juke.
Band H cars cost £275 in their first year and £195 a year afterwards. They include some models of the VW Golf and the Ford Focus. "
Source: Drivers punished for going green - Telegraph
The talks come as ministers try to prevent a fall in tax revenues as more motorists choose smaller, cleaner cars that incur a lower rate of duty. Labour has accused the Coalition of planning a “stealth tax” on drivers, effectively punishing them for going green.
Ministers say that while they have not finalised their plans, changes may be necessary to ensure the “sustainability of the public finances”.
One option being considered would replace the annual tax on cars with a one-off up-front charge on new vehicles when they are sold.
Chloe Smith, a Treasury minister, told the Commons last week that ministers are “considering whether Vehicle Excise Duty should be reformed to support the sustainability of public finances and to reflect the improvements in vehicle fuel efficiency”. As part of that process, motoring groups and other interested parties have been invited into the Treasury to discuss potential changes to VED.
One source involved in the discussions said ministers have made it clear that the consultation will lead to higher tax rates on some motorists.
“Revenues are under threat and it’s pretty clear that the Treasury needs to do something to increase its tax take or face losing a lot of money,” the source said.
Annual road tax for cars ranges from zero for those with the lowest CO2 emissions — which include electric and hybrid cars — to more than £200 for those with larger and less efficient petrol and diesel engines.
VED raises almost £6 billion a year for the Treasury, but official forecasts show that the revenue from the tax will fall as more people chose to drive low-emission cars.
Road tax rules give drivers a financial incentive to choose low-emission vehicles, as cleaner cars qualify for lower rates of VED.
Low-emission models like the Toyota Prius or the Nissan Leaf attract a zero rate of VED.
Cars in Band E face a £135 charge, and include some models of the VW Passat and the Nissan Juke.
Band H cars cost £275 in their first year and £195 a year afterwards. They include some models of the VW Golf and the Ford Focus. "
Source: Drivers punished for going green - Telegraph
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