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Chancellor plans CO2 car purchase tax

Date: 17 September 2007

Alistair Darling

Chancellor Alistair Darling is thought to be planning a £2000 new car tax for high CO2 cars, according to the Sunday Times.

The national newspaper claims to have seen a leaked Treasury document which proposes the new tax ready to be outlined in the pre-budget report due in mid-October.

The £2000 tax would apply to all new cars with only the greenest getting a full rebate. Those cars emitting more than 254g/km would be charged the full amount.

The 15-page report also proposes a new VED band to start at 255g/km which would attract a higher annual licence fee than the current highest band G (cars producing more than 225g/km) which will cost £400 from next April.

"The motor sector has become the target of choice for political parties jostling to be the greenest during this year's conference season, and the Treasury's leak of plans for a £2,000 tax on new cars, prior to an official announcement as part of the Pre-Budget Report, is another cynical attempt to score points," according to Sue Robinson, director of the National Franchised Dealers Association (NFDA), the body representing franchised car dealers.

What do you think of the tax proposals? Comment here.