The government has delayed its controversial plans for a vast increase in road tax.
The last budget set out a scheme for above-inflation rises in Vehicle Excise Duty (VED), described by the Chancellor Alistair Darling as a “green tax” for post-2001 cars with higher CO2 emissions.
Now the Chancellor is expected to announce a rethink of the VED rises in next week’s pre-budget report. It’s being seen as a significant climb-down.
As well as raising road tax for drivers of so-called ‘gas guzzlers’, the proposals would have stung drivers of conventional family saloons like the Ford Mondeo, with retrospective tax rises of up to £245 a year.
Any vehicles registered before 2001 with an engine displacement larger than three litres would also have been charged at the highest rate.
Although it’s likely the reforms will still apply to new vehicles, substantial rises in VED for vehicles registered between 2001-2006 are likely to be postponed for at least a year.