Another tax timebomb

8:51am Thursday 22nd May 2008

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 that 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 a 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 all emit more than 225g/km and so will cost £415 by 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.

The critical motion was tabled by one of the region's Labour MPs, Ronnie Campbell (Blyth Valley), who has led condemnation of this retrospective taxation and warned this is the "new 10p".

Mr Campbell quickly got support from Frank Cook (Stockton North), John Cummings (Easington), Denis Murphy (Wansbeck) and Bill Etherington (Sunderland North), among others.

These MPs are certain the new VED rates will hit the poor hardest. How can such families afford a new car, they are asking - just 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, 5.3 million of them.

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

MEANWHILE, Labour and Tory MPs quizzing Northern Rock boss Ron Sandler this week achieved rare cross-party unity on one issue - his eye-watering pay.

Liberal Democrat John Thurso appeared to commiserate that the chairman enjoyed no bonus scheme or pension, just a straight fee, asking: "Do you feel that's sufficient motivation for you?"

Mr Sandler is being paid £90,000 - every month. All around me, MPs (annual salary £60,000, under fire for allegedly lavish expenses) gritted their teeth and tried hard not to cry.

FINALLY, it was not easy to inject humour into Tuesday's abortion debate, as MPs swapped allegations of "botched" terminations and a return to backstreet Vera Drake-style despair.

So, full marks to the pro-choice demonstrators outside my window, who brought a smile to my lips with their protest song: "Get your rosaries off our ovaries."

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