Huge road tax hikes to go ahead

At a time when the government are at their lowest ebb, the economy is on it’s knees, inflation is up and consumers are feeling the most financial pain in over a decade it would seem mad to raise road tax by a vast margin. But that’s what Labour plan to do. It’s been labeled as yet another green tax by the government despite green peace saying the new plans gave green taxes a bad name and would not improve the environment.

After the ten pence tax band removal earlier this year you would think Gordon and Alistair would have learned their lesson. Not so it seems, not only are they prepared to drive a knife into the personal finances of many working class people they are also happy to lie to Parliament about how many people will be affected by the tax increases.

The current figure seems to stand at around nine million drivers who will be worse of under the plans. Gordon Brown had previously said that over half of motorists would be better off. He later had to back track and re define the phrase ‘better off’ to mean ‘better or no worse off’.

Despite massive opposition to the plans only a minor concession has been made which is to delay them a year. Instead of being rolled out over 2009 and 2010 they will be rolled out over a longer period. This it seems was enough to persuade many Labour MPs to vote for the increases. It’s most likely that when the full force of the changes do come into effect labour will be sat on the opposite side of the house of commons and be laughing as the tax goes up just as the Tories landslide back to power.

What will the higher road taxes mean for you?

The new tax changes will mean cars that people have already bought will be subject to massive hikes in road tax. Only the least polluting vehicles will see a reduction. A new top band of tax ‘Band M’ will be introduced for cars that emit more than 255g CO2 per km. A years tax will cost £425 for a band M vehicle and £900 in it’s first year on the road, this includes a ’showroom tax’.

One of the biggest problems people will face will be the value of the car they already own. If a working family bought a large people carrier or estate car a few years ago they will most likely see the value of the vehicle plummet. For those that still owe outstanding finance on the cars they will be be sent into a state of negative equity on their vehicle that will become impossible to sell. The tax disc and the fuel in the tank will be the two most valuable parts of the car!

The higher tax rates will raise an extra £430 million for the Treasury next year and £700 million the year after so it’s not difficult to see why Gordon and Alistair are so keen to get the increases through. Increases in tax for gas guzzlers are huge, decreases for eco cars are modest or non existent.

The recent hikes in petrol prices have seen the treasury net around £2 billion in extra revenue and VAT, this it seems is not enough pain for the motorist and more beating of their finances is required. It’s clear that the net result of these changes will not be a reduction in polluting cars on the roads, only an increase in the amount of money working people pay to the government.

Filed under: The Cost of Motoring