MPs say green tax on cars must go further

By Peter Griffiths

LONDON (Reuters) - Tax rises for drivers of "gas guzzling" cars should be much higher if ministers are to persuade people to buy more environmentally friendly vehicles, a group of MPs said on Monday.

In a critical report, parliament's Environmental Audit Committee said road tax reforms announced in the Budget are too modest and will do little to cut harmful emissions.

It called for "much more ambitious" reform of the car tax system, with bigger differences between bands for different-sized cars.

Chancellor Alistair Darling announced the changes in March to encourage drivers to choose greener cars. Motoring groups attacked him for refusing to exempt cars bought up to seven years ago.

The new system, due to come into force next year, will create 13 tax bands based on carbon emissions. Owners of the smallest cars will pay no annual tax, while those in the top band will pay 455 pounds.

"Why stop at a top rate of 455 pounds, why not go further?" the committee asked in its report. "There is perhaps a danger that the proposed changes are large enough to be noticed, but not large enough to change behaviour.

"If climate change really is as important and urgent as the government frequently and rightly acknowledges, then it would suggest there is a strong and defensible case for much more penal taxes on high-emissions cars."

Attempts to cut cars' emissions are moving too slowly and drastic action is needed, the MPs added. The projected carbon saving from the reform is "extremely disappointing", they said.