In a bid to create a vote winning policy in an election year, shadow transport minister Bernard Jenkin has begun what promises to be a bitter battle over the tax, which the Conservatives have labelled 'complicated, confusing and bureaucratic'.
Instead, the Tories want to introduce a benefit-in-kind system using the transaction price for a car as the foundation stone of the tax each driver pays. The plan would also use more than just CO2 emissions as the guide to the ultimate level of tax drivers pay.
Jenkin insisted the current plans were unacceptable and promised a push to swing Labour backbench support in favour of the Tories' alternative scheme, or rush through changes if the party won the General Election, which is expected to be held in May.
He said: 'We do not agree with Labour's plans for CO2-based taxation of all new vehicles. They ignore the damaging effect of other pollutants and do not deal at all with the fact that the worst polluting vehicles are the oldest ones. Company cars are among the most environmentally-friendly vehicles on our roads and taxing solely new cars on the basis of CO2 emissions does not make sense.'
Paymaster General Dawn Primarolo said: 'The company car tax charge is based on the car's list price at first registration as this is easily obtainable and is the fairest figure on which to base the charge.'