Green tax puts extra £1,000 on family cars

The Times has learnt that the review of low-carbon cars, commissioned by the Government and due to report in February, will recommend a range of tough measures to reduce carbon dioxide emissions.

Drivers who choose high-emission vehicles, including family saloons, will face much higher excise duties and a purchase tax. But grants are likely for people who opt for cars powered by alternative fuels and choose vehicles that are fitted with devices that reduce fuel consumption.

The Government has already raised vehicle excise duty to £300 for cars in Band G which produce more than 225g/km of CO2. The Band G rate is due to increase to £400 next year.

Department for Transport research found that the differential between each band would have to be increased to £300 to persuade most drivers to switch to lower-emission cars. The differential between bands E and F, which account for the majority of larger cars, is now £40.

The RAC Foundation said that the review should consider the impact on families of any tax changes.

Edmund King, the foundation’s director, said: “Many families need larger cars and it would be unfair to penalise them. Big increases in road tax could also be counterproductive because it can be greener for a low-mileage driver to keep running a larger car than switch to a hybrid.

“Professor King should beware of knee-jerk price signals based on the green agenda. Any changes must take effect slowly. People cannot be expected to change their cars overnight.”

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