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Taxes and charges on motorists

The Government announced changes to the current Vehicle Excise Duty (VED) system in 2008 as a direct response to the need to reduce emissions from cars. These will not come into full effect until 1 April 2009.

Awareness of these changes is low, and understanding of the exact detail of the new scheme and how it will impact owners is even lower.

Motorists responding to questions on the new VED scheme were given the following information in advance:

In the 2008 Budget, the Chancellor announced a change to the car road tax bands (also known as Vehicle Excise Duty/VED ratings). From 2009/10 six new bands will be introduced. If your car is registered after 1 March 2001, there will be a series of car road tax bands (A-M), which will be based on fuel type and emission levels.*

Just over half of motorists (54%) are aware that the existing road tax/VED bands A-G are based on cars' existing emission levels. Fewer (37%) are aware these bands are changing and even fewer, one in five, understand about the new VED bands (18%). Rather than being an issue with which they are engaged, road tax is something which motorists clearly feel is "done unto" them. They were also evenly split over whether backdating the tax was fair or not, adding to the view that they have little control over road tax.

It's probably the fairer way to do it. Because if you can't afford an expensive car, you buy a smaller car, so therefore you're paying less.

Hugh, motorist from Greater London

If you've got a big family of six or seven people, you're being penalised for having a big family. I could have got a smaller car and we could have used both cars on each journey. Instead, it's just one people carrier. I do feel you're being penalised.

Barry, motorist from Lincolnshire

I didn't know anything about those bands. I just thought there were two, one for a little engine, one for a big one.

Emma, motorist from Derbyshire


Despite this, and based on the explanation they were given, eight in 10 agreed that when buying their next car they would refer to the new road tax/VED bands to choose a more tax friendly car, and two in three agreed taxing a vehicle on the basis of its emissions is – in principle – a good thing.

It is not only large luxury or sports car drivers who will pay more for VED. Increases in VED rates will affect motorists who are driving medium sized cars, for example a Ford Focus or Vauxhall Astra. Virtually every petrol-engined car in this "lower medium" category, the second largest segment in the market9 will pay a higher rate of VED with only the smaller engined diesel derivatives paying less.

I mean, I think it's silly, they think you're going to buy a car, for £25,000 or £30,000 plus, and someone's going to say to me, "do you know you can save £40?" and I'll say, "cancel the Bentley!" It's not going to happen!

David, motorist from Greater London

You can't let people make a decision and then afterwards punish them for that decision, if you give people the information, even if it's ludicrously difficult to understand, and then say these are the consequences that's one thing, but if you let people in a free market economy make decisions, and then afterwards say, "that was a bad decision, now I've decided I'm going to punish you for it," that should be illegal.

Peter, motorist from Greater London

In addition one of the problems with the new VED bandings is that it does little to affect the purchasing decisions of those who can afford the high-emitting cars that are at the top-end range of the market. It can be argued that even the highest levels of the VED rates proposed, will do little to alter their choice or decision.

Although the changes to the VED scheme were introduced as part of an overall strategy to reduce car emissions, the Government's own data suggests that the latest round of changes is only likely to reduce emissions by 0.16Mt CO210 against total emissions from private vehicles of 17.7MT CO211 – an overall reduction of just under 1%. Such admissions can only increase motorists' cynicism towards the changes in VED and reinforce their view that such taxes are only designed to raise revenue.

Changes to VED bands

Labelling and better information