Number of tax-exempt cars to drop
It has been estimated that the number of tax-exempt cars will be slashed from around 445 to 13 in 18 months’ time under new car tax plans.
This means that motorists buying a car with low emissions will not be rewarded as they are now, according to Rebecca Long-Bailey, the Shadow Treasury Minister.
George Osborne stated in his July budget that new vehicle excise duty (VED) changes will see only zero-emissions vehicles spared the tax.
This means that owners of currently exempt vehicles emitting under 100g/km of CO2 would have to pay the full £140 yearly rate from April 2017.
Ms Long-Bailey said drivers who invested in greener cars would be hit by a ‘substantially’ higher road duty. She added that just 13 vehicles face exemption under the new scheme, compared to around 445 vehicles at the moment.
Ms Long-Bailey also claims that the Conservatives’ new scheme will benefit higher-polluting motors.
The switch comes at a time when greener cars are becoming more popular, according to a poll released this month.
The Institute of the Motor Industry (IMI) reported that half of drivers hoping to lease or buy a new vehicle between now and 2017 are thinking or buying a hybrid or electric vehicle.
Ms Long-Bailey wants the road tax system to encourage low-emissions vehicles by introducing reduced charges for them. She is calling for more CO2-emission-based bands.
But the Conservatives have countered that Labour’s plans will not only reinforce current road tax anomalies, they will also punish poorer families for being unable to afford more expensive greener motors.
David Gauke, the Treasury Minister, says the Government’s changes will mean a fairer, more sustainable system than the current one.
He says Labour’s amendments to the road tax part of the Government’s Finance Bill would need constant revisions to keep up with changes in emissions technology.
Mr Gauke claims this would bring ‘uncertainty’ for motor manufacturers and drivers alike. He also says that poorer households driving less fuel-efficient, older cars would pay more duty than richer families.
The Government defeated Labour’s road duty charge amendment by a majority of 53 votes.