2009 tax hikes scrapped

By Jack Carfrae

11th November 2008

The Government has hinted that it will scrap the planned Vehicle Excise Duty increases for 2009. Treasury insiders leaked news that the tax increases, originally scheduled for April next year, will be delayed until 2010 or later – or even completely changed – in an effort by politicians to help out the poor UK economy.

Chancellor Alistair Darling will confirm the exact details of the tax system for 2009 during his pre-Budget announcement, expected next week.

The new charge system, for post March 2001 cars only, would have hit luxury and performance cars the most, but it would also have severely affected large, petrol-engined family cars – particularly those that emit more than 171g/km of CO2. This would have led to many such models being deemed worthless or even scrapped.

But it's not just vehicle tax that's in for a shake up. The government is also experimenting with automatic road charging for the most congested areas in the country.

Hundreds of drivers will take part in the scheme, which involves fitting a satellite tracking device to cars and will cost £4m of tax money this year alone. Four locations have been selected, and each driver will have a shadow account set-up out of which the payment will be taken.

Although the Department for Transport is staying silent on exactly who is participating, it is understood one of the trials is being conducted with 100 BT staff in Suffolk, and another by satellite navigation maker Trafficmaster. The aim is to assess the feasibility of collecting all road charging automatically – including inner city congestion charging, motorway and bridge tolls.

In 2004 the Government conducted a study of possible charges, and concluded that up to £1.30 per mile could be justified in some places! However, it claimed that only 0.5 percent of roads would be subject to this rate.

Under the charging proposals, drivers will be able to go online to check how much they’ve been charged and exactly where they’ve travelled. But Government ministers hope to allay fears of a "big brother" society by allowing them to stop the system transmitting the car’s location, but only send the amount of miles driven and the charging rate. 

Transport Minister Paul Clark said: “Nobody will thank us if we do not look at every option. If we sit back and do nothing you can be sure that economic growth will lead to gridlock.”