The government is today facing fresh calls to scrap planned increases to
green taxes as a group of Labour MPs demand the repeal of a £200 increase in
road tax and hauliers protest against soaring fuel prices.
More than 30 Labour MPs have signed a Commons early day motion demanding that
planned
increases in vehicle excise duty, due to be introduced from next year, are
scrapped.
The group, who are threatening a full blown rebellion similar to that which
recently forced the government into a u-turn over the scrapping of the 10 pence
tax band, are arguing that the changes represent an unacceptable retrospective
tax that would undermine the popularity of green taxes with voters.
Under the proposed changes, designed to encourage drivers to purchase more
fuel efficient vehicles, all cars emitting 150g of CO2 per km or less would see
road tax cut with band B cars such as the Toyota Prius paying just £20 a year.
However, all band G to M cars, which emit more than 150g of CO2 per km, will see
annual vehicle excise duty increase with purchasers of the most polluting
vehicles having to pay almost £1,000 a year. Controversially, the changes apply
not just to all new cars, but also all cars registered since 2001.
Rob Marris, parliamentary private secretary to Northern Ireland secretary,
Shaun Woodward, who has joined the group of backbenchers, told Radio 4's PM
programme yesterday that the move was "undesirable" and would slap a £200 tax
bill on many medium sized cars.
"It will hit a vehicle which produces 180g of CO2 per km with a 50 per cent
increase," he said. "That is for a car which has already been in the fleet for
up to seven years. In that sense it is retrospective taxation which is
undesirable."
Marris also warned that the move would risk making green taxes increasingly
unpopular. "I am in favour of prospective green taxes to change people's
decisions when buying a new car," he added. "But taxing them heavily on a car
which may have been bought seven years ago does not seem a good way to go and
will discredit the concept of green taxes."
The group of backbenchers secured a degree of support from environmental
lobby group Greenpeace, which claimed that the retrospective nature of the
changes were a "mistake". A spokesman for the company said that the higher rates
of tax should only be applied to new cars, but should also be a lot tougher on
the most polluting cars with vehicles in the top bracket being charged £2,000 a
year.
Nigel May of accountancy firm
MacIntyre Hudson warned that the
government was risking a repeat of the "10 pence tax fiasco". "Given the
political back drop many MPs in marginal seats are going to see a large one off
charge on medium sized cars as politically explosive," he said, adding that the
government should have been more open about the implications of the changes.
"When the changes were announced they were positioned as a "showroom tax","
he said. "When the government introduces green taxes they need to be clearer
about the impact they will have."
The backbench rebellion comes as hauliers and business leaders are calling on
the government to further defer a planned two pence increase in fuel duty for
October.
Lorry drivers are today staging a slow-moving protest through central London
demanding a rebate on fuel duty. The protest follows warnings from the
British Chambers of Commerce
that businesses are being forced "to the edge" by rising fuel prices.
"Sending a positive message to business would make a huge difference, and the
Government should start by announcing that they are scrapping the next 2p hike
in fuel duty, planned for October," said Chris Hannant, head of policy at the
business group. "The Treasury is already receiving a massive windfall from above
expectation oil prices, which makes any extra fuel levy totally unjustifiable."
With the government a long way down in the polls Ministers are said to be
considering deferring both tax increases. However, they are also reported to be
concerned that such a move would undermine their green credentials, with
Environment minister Joan Ruddock warning that the government "could not lose
sight of the environment agenda".
Environmental groups urged the government to stick to its guns and defend the
principle of green taxes. A spokesman for Greenpeace said that it supported the
fuel duty escalator which would result in above inflation increases in fuel duty
designed to make the cost of motoring more expensive. However, he added that the
receipts from fuel duty should be used to improve public transport options.
May agreed that despite overseeing a reduction in the proportion of revenue
raised through green taxes the government should not turn its back on green
taxation. "It is clearer and clearer that something must be done to control use
of fossil fuels," he observed. "And while green taxes are a blunt instrument
they are still an instrument that can be effective."
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