Pre-Budget statement: Cheaper road tax for cleaner motorists

Environment

TWO NEW ways for Britain to tackle the greenhouse gas emissions causing global warming, a variable road tax on motor vehicles and an energy tax on industry, were put on the political agenda by Gordon Brown in his speech yesterday.

The new road tax, which the Government proposes will give motorists a pounds 50 reduction from the current pounds 150 flat-rate vehicle excise duty if their car falls into a cleaner and more efficient fuel-burning category, is likely to be brought in with the Budget next March.

It is regarded as long overdue, as Britain is now the only country in the European Union which does not differentiate between big and small engine sizes or other characteristics of cars in its vehicle tax regime.

But the energy tax is still some way off, although now likely to happen.

Lord Marshall of Knightsbridge, chairman of British Airways, gave it his approval in his eagerly awaited report on the idea, which Mr Brown commissioned at the last Budget, and published yesterday.

Lord Marshall rejected a British domestic system of tradeable permits for emissions of carbon dioxide, the principal greenhouse gas, as impractical, but said: "There probably is a role for a tax if businesses of all sizes and from all sectors are to contribute to improved energy efficiency and help meet the UK's emissions targets."

The Confederation of British Industry, of which Lord Marshall was president until last July, was still unhappy. "Business is committed to helping the UK meet its legally binding climate change targets, but we are not convinced that energy taxes are the most effective way of achieving this objective," said Adair Turner, the CBI's director-general.

"And we would certainly caution against any new taxes on business, even if revenue neutral, in the current uncertain economic climate."