Budget’s showroom tax to hit cost of towcars

THE cost of popular cars used for caravan tugging will rise sharply as a result of this week’s Budget.

In his first Budget, Chancellor Alistair Darling announced a major reform of Vehicle Excise Duty (VED).

From April next year, the drivers of the most polluting cars – many of which used by the owners of larger caravans - will pay VED of £440.

Then from April 2010, people buying new models that are the most polluting will pay vehicle excise duty of £950 in their first year of ownership. After that they or subsequent owners will then pay vehicle excise duty of £455 per year.

Those buying vehicles classed as the second-most polluting, will pay £750 in the first year and £430 per year thereafter.

It means from 2010, the lowest-polluting cars will pay no road tax in the first year, with the highest-polluting cars paying £950.

Mr Darling said: “I am proposing a major reform to Vehicle Excise Duty to encourage manufacturers to produce cleaner cars and by introducing new bands, there will be an incentive to encourage drivers to choose the least polluting car.

“And as a second stage for new cars, from April 2010 there will be a new first-year rate based on carbon dioxide emissions of the car.

Cars that emit less than the proposed 130 grams per kilometre European standard of carbon dioxide emissions will pay no car tax at all in the first year. But a higher first year rate will be introduced on the most polluting cars.”

Society of Motor Manufacturers and Traders (SMMT) chief executive Paul Everitt said: “Sales taxes on higher emitting cars have little effect on CO2 emissions and create an unwelcome market distortion,” said SMMT chief executive.

“Introducing what is effectively a sales tax for many new cars is a retrograde step.

"Trying to force people out of high-value cars has no environmental merit and will be seen as a smokescreen for revenue-raising.”

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