Rob Merrick: New tax timebomb

May 21 2008 by Rob Merrick, Liverpool Daily Post

WITH the 10p tax fiasco finally dealt with, relieved Labour MPs consoled themselves that Gordon Brown would never repeat such a blunder.

But, with the ink barely dry on last week's emergency “mini-Budget”, many now fear their beleaguered Prime Minister has already primed a second ticking tax timebomb.

Just as with the 10p row, this tax hike will strike 12 months after the Budget that announced it – in April next year – and will be seen as similarly unfair by the losers.

Furthermore, the Prime Minister, judging by his comments at a recent press conference, is displaying the same ostrich-like attitude as cost him so dear over the 10p rate.

The issue is increases in vehicle excise duty (VED) for so-called “gas-guzzling” cars, to persuade motorists to buy less polluting models and cut Britain's carbon emissions.

A noble aim, of course. After all, why shouldn't a Jaguar XJ (330 grams of CO² per kilometre) cost you £440 a year, while an environment-friendly Toyota Prius (104 g/km) costs just £20?

Well, the first problem, say unhappy Labour MPs who have tabled a Parliamentary motion, is that it is not just the drivers of the big gas-guzzlers who must cough up.

Family cars including the Renault Espace, Vauxhall Zafira, Ford Galaxy, Citroen C8 and Volvo C70 emit more than 225g/km – and so will cost £415 in 2010, compared to just £210 this year.

Worse, the new VED rates will apply to all vehicles registered since 2001 – which means the only way to pay less is to sell your car and buy a different, cleaner, set of wheels.

MPs backing the motion, who include Peter Kilfoyle (Walton) and Bob Wareing (West Derby), condemn this “retrospective taxation”, which will hit the poor hardest. How can such families afford a new car, as the credit crunch bites? The simmering 10p tax row exploded into life when Mr Brown told a private meeting of astonished Labour MPs that there were no losers. There were, in fact, 5.3m of them.

No wonder shivers went down Labour spines last week when, asked why the VED changes were retrospective, the Prime Minister replied: "They are not retrospective . . ."

MANY Labour MPs have long suspected Frank Field is a closet Tory – and now he has spoken about the time when he was.

The Birkenhead MP remembered: "I was shoehorned out of the Conservative Party while helping to organise the boycott of South African goods, while I was at school."

However, in case of any doubt in 2008, Mr Field added: "Just because the Conservative Party might advocate ideas I have put forward doesn't make me a Conservative."