Pulling another budget tax U-turn

Last Modified: 02 Jul 2008
By: Gary Gibbon, Tom Clarke

Labour backbenchers again force the government to water down their plans for taxes, this time on duties for older polluting cars.

In his March budget he announced an increase in vehicle excise duty on all cars with higher emissions, bought over the last seven years.

But that prompted accusations that he was punishing drivers for decisions they couldn't change. And this afternoon, as the Commons debated the finance bill, the government indicated to Labour rebels that it is now planning to phase in the measure over a longer period.

A green tax?

The government justified their original proposals for reform of vehicle excise duty as an environmental tax, saying they will encourage the use of more fuel-efficient cars.

But how green a measure is it really, when the tax penalises the existing ownership of a vehicle rather than its use?