Owners of gas-guzzling vehicles will have to pay more for their annual car tax in "green" measures announced today in the Budget.
But all motorists were able to breathe a sigh of relief when Chancellor Gordon Brown chose to defer until September 1 the usual inflation-rate increase in fuel duty that would have increased petrol pump prices.
To "encourage cleaner fuels and cars", Mr Brown said he was altering the rates of the annual car tax vehicle excise duty (VED).
VED is based on vehicle's carbon dioxide (CO2) emissions, with the most-green vehicles paying £65-75 a year and the most-polluting ones forking out £165 to £175.
Today, Mr Brown said that the least-polluting would pay no VED at all, while the most-polluting would now fall into a new, higher emissions band which would leave them facing a VED bill of £210.
The Chancellor said that 1% of all vehicles would fall into this new high band. A number of off-road 4x4 vehicles will now be in this top band as will vehicles such as the Rolls-Royce Phantom and the Aston Martin Vantage.
At the other end of the scale, owners of cars such as the Ford Fiesta 1.4 diesel and the Nissan Micra 1.5 diesel who up to now paid VED of £85 a year will now pay around £40.
Mr Brown said that around five million cars will have their VED cut and that duty paid will be either frozen or reduced for 50% of cars.
Instead of just 300,000 motorists paying £100 a year or less, three million will now pay £100 or less, he added.
He also said that to further reduce carbon emissions, 5% of all fuel will be made from bio-fuels by 2010.
Edmund King, executive director of the RAC Foundation, said: "Brown's radical tax disc reforms give a green light to cleaner motoring. Reduced tax for cleaner vehicles is a great incentive to help motorists choose the most environmentally friendly model suitable for their needs."
Freight Transport Association chief economist Simon Chapman said: "It was very important that the Chancellor did not add to industry's enormous fuel costs by further increasing diesel duty.
"However, it is unfortunate that he did not bite the bullet and extend the freeze for a full year and thus establish a little more stability into transport operating costs."
Stephen Joseph, director of Transport 2000, said: "The Chancellor has listened to environmentalists but only with half an ear.
"The increase in tax on gas guzzlers is derisory and will hardly pay for the new paperwork. Drivers of big cars and 'Chelsea tractors' have got off lightly. This is a Budget that will see salesmen in 4x4 showrooms rubbing their hands in glee."
Countryside Alliance chief executive Simon Hart said he feared the VED increase "directly discriminates against rural Britain with no significant environmental impact".Reuse content