Pale green budget focuses on vehicle taxes

A hefty tax rise of more than 100% for new, gas guzzling cars was the most prominent environmental measure in Chancellor Alistair Darling’s Budget on March 13. Owners of the most polluting cars, emitting more than 255 grams of CO2 per kilometre, will have to pay VED of £950 for the first year when they buy the car. But this will not come in until 2010.

At the same time, cars that produce less than 130g CO2 per km will be charged zero VED for their first year on the road. The changes are intended to give a strong incentive, at the point of sale, for motorists to buy less polluting new cars.

From next year, as expected, the Government is also strengthening the link between carbon dioxide emissions and VED paid throughout the car's life. From next year, six more emission-category bands band are being introduced, with lower taxes for those under 150g CO2 per km and higher for those above.

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