Gordon Brown’s budget didn’t throw up too many surprises; after all, we expected him to take more money out of the motorist’s pocket. Below are the changes due over the next three years.
An increase of 2p per litre this year, 2p in 2008-09, and 1.84p in 2009-10.
Vehicle Excise Duty (VED)
• Group B (101-120g/km) reduced from £40 to £35, and frozen at this rate until 2010
• Groups C-E (121-185 g/km), as well as all cars registered before 2001, will have their VED raised by £5 each year for the next three years.
• Group F (186-225 g/km) raised by £10 this year to £200, then £5 for each of the following two years.
• Group G (226 g/km+) increased from £210 to £300 this year, then to £400 the following year.
However, this is only applicable to cars sold on or after 23 March 2006 All changes take effect tomorrow, except Fuel Duty which comes into force from 1 October, with changes in subsequent years occurring from 1 April. The Chancellor outlined plans to reduce the average CO2 emissions for new car sales in 2012 to 120g/km, eventually moving to 100g/km.
Considering that the UK average has dropped from 192g/km in 1995 to 168g/km in 2006, his plans are somewhat optimistic. Today's Budget has angered the Environmental Transport Association (ETA). It believes that while Gordon Brown is giving the impression of tackling gas-guzzlers, those cars in Band G make up less than 1% of cars on the road. Rather it is again the everyday motorist who will be hit hardest.
Brown also plans to align ‘the VED rates for petrol and diesel cars as the differential in nitrogen oxides and particulate matter emissions for new cars is expected to fall to close to zero once Euro V and VI emission standards become mandatory’.
At this stage it's unclear whether the diesel surcharge will be abolished, or the cost of a petrol tax disc raised. Edmund King, executive director of the RAC Foundation, welcomed the Budget, hailing it a good incentive for greener motoring. He said: 'Cars are getting cleaner and greener and whilst motorists will not be pleased with more price increases, longer term incentives to go green are welcome. There will also be relief that the proposed fuel duty increase has been deferred.
'Brown's radical proposal for tax disc reforms gives a green light to cleaner motoring. Drivers and manufacturers need time to change their vehicles. Reduced tax for cleaner vehicles is a great incentive to help motorists choose the most environmentally friendly model suitable for their needs.'
Far-sighted? Or futile? Let us know your Budget reactions by clicking on 'Add comment' below