Millions of motorists to lose out in backdated green car tax, say Tories

Millions of motorists to lose out in backdated green car tax, say Tories

More than 2 million people will be made worse off by government plans to increase the car tax on environmentally unfriendly vehicles bought over the last seven years, the Tories claimed yesterday.

In an attempt to force a rethink, the Conservatives warned that the changes would hit twice the number of people that have been left worse off by the abolition of the 10p starting rate of tax.

The Tories will today table an amendment to the finance bill that would prevent the rise in car tax, due to be introduced in April, from being applied retrospectively to vehicles bought since 2001.

But a Conservative party split on the issue emerged today when a senior backbencher, Tim Yeo, said it was important for the government to press ahead with its plans to increase taxes on polluting vehicles.

The government, which responded to growing anger among motorists in May by indicating it would defer a rise in fuel duty in September, is indicating it has no plans to withdraw the increase in vehicle excise duty.

The prime minister's official spokesman reiterated today that thegovernment's position had not changed.

He said: "The government's policy was set out by the chancellor in thebudget and that is the government's position.

"What the government will acknowledge is that we do have to take difficultdecisions sometimes if we want to show we are serious about our greenagenda.

"The action we are taking in relation to VED will save an additional.....continued below

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1.3m tonnes of CO2 by 2020."

The change is designed to encourage people to buy low-emission cars, but it has been criticised by the Tories for breaking one of the main rules of environmental taxation: that taxes should encourage good behaviour, rather than punish past decisions.

The Tories said the government should act now because 2.3 million people - more than double the 1.1m households which are still losing out from the abolition of the 10p tax rate - would pay between £100 and £245 extra.

Drivers of family band F cars would be hardest hit in two ways: A total of 1.2 million motorists in this category, driving the Citroën C8, the Renault Espace and the VW Passat, would see their £210 car tax rise to £430 or £455 in 2010.

A further 1.1m motorists in this category, driving the Citroën Picasso, Ford Mondeo, Vauxhall Astra and Honda Accord, would see their car tax rise from £210 this year to £310 in 2010.

Justine Greening, shadow Treasury minister, said: "Labour's backdated [vehicle excise duty] rises will double the pain for families struggling to cope, hitting twice as many people for up to twice as much as the 10p tax fiasco. Labour backbenchers joined us in making Gordon Brown see sense to compensate the 10p tax rate losers.

"This time with road tax, families can't afford to wait a year for Labour MPs to force another government U-turn. They should end the uncertainty now and vote down these unfair and retrospective VED tax rises."

But Yeo, chairman of the Commons environmental audit committee, warned that giving motorists an "easier ride" on green taxes would be "catastrophic" for the fight against climate change.

He said the debate was whether the proposed tax hike was being introduced too quickly or in a way that was too burdensome, but that "the principle was the right principle".