Green posturing drives up tax burden for families, says SMMT

Chancellor Gordon Brown today moved to out-green the Tories and boost government coffers by sending road tax for higher emitting cars through the roof. SMMT estimates a bonanza of £44.5m for number 11 Downing Street over the next two years through changes to vehicle excise duty (VED) that will raise the annual charge for band G cars by 90 per cent. That means all new cars emitting more than 225 g/km CO₂, half of which are not 4x4s.¹

‘The chancellor and the green lobby may have convinced the public that this will affect rich drivers in central London,’ said SMMT chief executive Christopher Macgowan. ‘The truth is that many thousands of people across the UK who rely on larger-engined vehicles, like families, farmers and small business people, face another hike in motoring bills in the years to come.’

The motor industry is not opposed to CO₂-based taxation. In the last five years, strong signals on company car tax, vehicle excise duty and fuel tax (the lion’s share of annual motoring costs), have helped support manufacturers’ investment to bring lower carbon cars to market.

Distribution of new car market by current VED bands

‘We have called for stability, clarity and a long-term approach to CO₂-based taxation,’ said Macgowan. ‘What we heard today was the opposite. This is gesture politics at its most cynical.’

176,141 new cars were sold in 2006 with emissions above the current band G rate, 225 g/km. Of these 90,302 (51per cent) were 4x4s. Examples of the type of larger family cars that will also be hit by changes announced in the budget: Vauxhall Zafira people carrier (2.0 litre petrol), Renault Espace people carrier (2.0 litre petrol), Peugeot 407 estate (2.2 litre petrol), Honda Accord estate (2.4 litre petrol), Ford Mondeo estate (2.0 litre petrol)