The Government’s plans to increase vehicle excise duty for high CO2-emitting vehicles do not go far enough, according to MPs.
The Environmental Audit Committee said the plans were a step in the right direction, but advocated an even more ambitious reform.
The proposals would see the number of VED bands increase to 13 and the highest-emitting vehicles charged £455 a year in 2009/2010.
But the committee’s report said the cost difference between tax bands was still not enough to encourage the purchase of cleaner models.
Committee chairman Tim Yeo said: “The Government should be even bolder – really penal rates for high-emission cars and really attractive ‘carrots’ so that tax is almost nothing on the greenest models.”
The RAC Foundation, however, said plans to include vehicles dating back to 2001 in the changes were unfair, and that the new charges should only apply to new vehicles.
The foundation said the move would distort the second hand market and leave motorists driving inefficient cars, with many suffering a loss in resale value.
Sheila Rainger, the foundation’s head of campaigns, said: “It’s a matter of basic fairness that significant VED changes should only apply to future purchases, not to vehicle choices made up to seven years in the past.
“It is beyond belief that the treasury introduced these changes without any research into the likely effects on the second hand market.”
Mr Yeo defended the charging of used cars, saying that three of every four cars bought were second hand.
However, three committee members echoed the RAC Foundation’s concerns, calling the plan ‘retrospective taxation’.
The committee also advocated a ‘car scrappage’ scheme to pay drivers to switch to more environmentally-friendly cars.