Transport - Road Tax

Motorists who drive higher-polluting cars may have to pay more road tax under plans considered by the Department of Transport. A spokesman said the department was working closely with the Treasury to make Vehicle Excise Duty "better reflect carbon dioxide emissions". Rates already depend on engine size but not enough to deter people from buying bigger cars, according to ministers. Larger-engined cars produce up to five times more carbon dioxide per mile than the most fuel-efficient. The government has promised to cut emissions by 20% by 2010 and 60% by 2050.

But the Institute of Public Policy Research predicted carbon dioxide emissions from road transport would rise by 15% by 2020 under the current road tax regime. The annual duty on a Land Rover Discovery V8, one of the largest four-wheel-drives, which emits 397 grams of carbon dioxide per kilometre is £160 - only £75 more than for a diesel Renault Clio that emits 110g. While sales of the smallest cars have fallen by 10% this year, demand for four-wheel-drive vehicles has grown by 18%.

"More people will be guided by their pocket than by their environmental concerns," transport minister David Jamieson told an institute seminar on vehicles and climate change. The government is also preparing to introduce colour-coded labels that will rank new cars in showrooms according to their pollution rates from dark green for the lowest to red for the highest. RAC Foundation executive director Edmund King said the government should target the cheaper end of the market as the Vehicle Excise Duty (VED) would have to rise to £500 before it would start to reduce demand for large-engine luxury cars.

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