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Economics - Raising Money

By the end of the year, people who are getting rid of old cars could be charged £100 or more to pay for them to be recycled. The EU End of Life Scrap carsVehicles Directive should come into operation in April, but the Department of Trade and Industry admits that it is running late. Under the EU directive, car manufacturers must bear the cost of recycling from 2007. But until then the Government has to decide how the cost will be met. 'One option is that the last owner pays for the disposal of the car,' says a spokesman. Even when 2007 comes along, manufacturers will almost certainly build the recycling cost into car prices.

If the Government decides that, between now and then, the last owner will foot the bill, many of the 2 million vehicles that are scrapped each year will probably be dumped in the countryside. The car disposal tax is one of many new types of tax being considered by the Government. It is also one of several where the biggest impact could be on the least wealthy. In its desperation not to put up income tax, the Government is also considering extending a range of existing taxes. Council tax, for instance, goes up by an average of 8 per cent. Many commentators are expecting national insurance payments to go up, either through an increase in the 10 per cent payment rate, or by the ending of the £29,900 earnings lid.

Houses of ParliamentAnother possibility is an 'NHS tax' to fund the health service, although Chancellor Gordon Brown has been less than enthusiastic about hypothecated taxes (where taxpayers are told the use of the money) in the past. Or might the Chancellor, in his Budget statement, increase the rate of VAT? He could argue that our 15 per cent rate is low in comparison with France, where some items carry a 20.6 per cent charge. Whatever the Chancellor does, there are many other taxes being considered and many other people who can introduce them. From February 2003, people driving cars into central London will pay £5 a day for the privilege. Other cities - including Bath, Reading and Leicester - could follow suit. Local authorities also have the power, under the Transport Act 2000, to levy 'workplace parking charges' in cases where employers provide parking.

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