‘Green’ car tax will hit poorest hardest

London Telegraph
Friday, July 11, 2008

New “green” car taxes will hit hundreds of thousands of the poorest families, new figures show, as Labour backbenchers told the Government it was heading for a repeat of the 10p tax revolt.

About 400,000 of the lowest earners will pay an average of £80 a year more following changes to Vehicle Excise Duty (VED), according to calculations based on official Treasury data. Of those, 140,000 will pay at least £100 a year more in car tax and for some, bills will increase by up to £245.

This means that in total, Britain’s poorest families – defined as those on an income of £15,000 or less – will pay a total of £32 million extra in VED in the next two years.

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The analysis, carried out by Justine Greening, a Tory frontbencher, led MPs to warn of a rerun of the 10p tax row, when the decision to scrap the lowest income tax band alienated millions of Labour’s core voters.

A back-bench rebellion forced the Government to rethink the plans and opponents of the car tax changes have called for another climbdown before the parliamentary summer recess.

The Treasury admitted the scheme would leave a total of 9.4 million motorists significantly worse off and another 8.4 million no better off, with only 4.1 million benefiting. This was despite Gordon Brown repeatedly insisting that a majority of drivers would benefit.

• A d v e r t i s e m e n t

The Daily Telegraph has campaigned against the tax changes since they were disclosed in the Budget in March.

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