Budget to target cars with new taxes

By Ben Russell Political Correspondent

Alistair Darling will attempt to reassert the Government's green credentials in his Budget on Wednesday by cracking down on high-emission "gas guzzlers" and encouraging the production of more fuel-efficient vehicles.

He is expected to make it clear that the battle against climate change is one of the Treasury's key objectives and is thought to be considering a showroom tax of up to £2,000 on the most polluting cars. He may take his lead from a series of radical proposals for cutting emissions which will be outlined in a report by Professor Julia King, vice-chancellor of Aston University.

They are thought to include a recommendation to give councils the power to ban high-emission cars from town centres, or to restrict parking to vehicles producing the least pollution.

But yesterday George Osborne, the Shadow Chancellor, warned Mr Darling not to use environmental levies as new "stealth taxes", urging him to offset green tax increases with cuts elsewhere.

Charlie Kronick, a senior climate change campaigner at Greenpeace, was sceptical about the Government's so-called green credentials saying: "The reality has yet to match the rhetoric."

The electoral significance of the debate about green taxes will also be the underlined in policies to be unveiled today by the Mayor of London, Ken Livingstone. He is to launch his transport manifesto for the capital, which will include a commitment to introduce 500 hybrid-engined buses by 2010. He is already planning to increase to £25 the congestion charge for the most polluting cars if they drive into the centre of London.

The Chancellor is also expected to introduce higher taxes on wine and spirits, amid growing concern at binge drinking, but is not expected to include a windfall tax on power companies, despite their record profits.