Round the bend on VED

There remains a real possibility of a repeat of the fuel price protests of 2000 which so scarred the then Chancellor Gordon Brown’s outlook on eco-taxation.

Even if the country isn’t brought to a standstill in the next few months by refinery blockades and go-slow motorway convoys, there is still huge pressure on the government to further delay a 2p increase in road fuel duty. The increase was already postponed until the autumn in March’s Budget speech.

If the government were to cave in, this would be neither an environmental nor a fiscal disaster. Most of the missing revenue is likely to be recovered by increased VAT income reaped by higher fuel prices. And if the point of high fuel duties is to reduce carbon emissions, then when the market lifts prices far higher and quicker than a fuel duty escalator ever could there is scant argument for extra eco-taxation.

But the government is also under pressure to cancel planned changes to the annual Vehicle Excise Duty due next April which affect cars already on the road (rather than new vehicles in the showrooms). Owners of cars with below average CO2 emissions would generally be taxed less than they are now; those with higher emissions would pay more (ENDS Report 398, pp 4-5 ).

Many voices, including some backbench Labour MPs, say this is unfairly "retrospective". They argue that people who bought their cars years ago are stuck with them; there is nothing green they can do to avoid this particular eco-tax. They say this is the kind of thing that gives environmental taxes a bad name.

Greenpeace, reverting to its worst populist instincts, joined in. So did Conservative leader David Cameron, in an otherwise largely welcome, refreshing speech devoted to green issues (p 4 ).

They are wrong. Drivers have been told for years about their vehicles’ emissions, and that gas guzzlers do more climate damage than thrifty, small-engined types - both through car advertising and the process of renewing their tax disc.

And there is an obvious green response to the proposed VED changes - sell up and buy a more fuel efficient car, either new or second hand. We need the fastest possible increase in drivers’ awareness of carbon footprints and the fastest possible switch to lower-emitting cars. As the International Energy Agency warns, we are running out of time to tackle climate change (see pp 13-14 ). The proposed VED changes, along with high fuel prices, can contribute to pushing gas guzzlers off the road.

The Chancellor’s mistake is to seek to raise extra revenue from these changes. Instead, they should have been revenue neutral, with the receipts from higher VED for higher emitters only just covering the lower tax take from greener vehicles. His green case would then be unassailable.