The new charge - which would raise more than £50 million a year - will be introduced on April 1 if MPs give it the go-ahead. There is already widespread industry speculation that Chancellor Gordon Brown could announce reform of the existing road fund licence system in the Budget on March 17 leading to its ultimate demise.
The Labour Party said in its election manifesto that it wanted to review the vehicle excise duty regime in a bid to promote low emission vehicles. The Liberal Democrats in its election manifesto called for vehicle excise duty to be cut to £10 for cars up to 1600cc funded by raising duty on fuel by 4p a litre/18p a gallon. In 1996/97 the Government collected £16,928 million in fuel duties and £4,101 million in vehicle excise duties.