The next 'hidden' tax change aimed at those on lower incomes?
Posted by michael on May 2, 2008
Banana skins grow on banana plants but it is possible that New Labour has found a way to mass produce them!
As with the 10% tax band self-inflicted injury, New Labour could have another slip up on the way.
Labour has introduced a new method of raising road tax on vehicles based on carbon dioxide emissions. All new vehicles are subject to a road tax amount based on a sliding scale dependant on various factors.
So far so good. But the headline doesn’t tell the story!
The exemption for vehicles registered from 2001 has now been dropped. All cars purchased from this date will become subject to the new road tax charges when they are introduced.
Brand new cars are reasonably handled under this taxation system. The manufacturers are doing their bit to reduce emissions on new cars so that they fit into the lower tax bands.
But people with second hand cars could be badly hit. A brand new car that costs someone £10,000 will not particularly give these people a problem if they have pay £500 per year in car tax.
But what about a person with a second hand car that cost them £1000? Would they be happy to pay £500 per year in car tax? I suspect not!
It looks like New Labour have again decided that those on lower wages, who have no choice but to buy older used cars, will have to pay the same tax as those who can afford brand new cars. Actually the tax on the older cars will be higher than on the equivalent new cars because the new models should be more efficient in their C02 emissions!
The values of the used cars may be badly affected. This will affect values of lease cars and cars purchased on credit. I doubt that the price of new cars will be dropped so if the resale price drops then the customer will have to make up the difference!
I wonder if New Labour genuinely understand the potential consequences of their proposed changes?
