BRITAIN IS SET FOR a dramatic re-working of its car taxation regime, according to rumours leaking out of Whitehall.

Using CO2 emissions as its basis, civil servants are working on plans that could result in congestion charges, road tax and even company car charges based on engine size from 2008.

According to two separate sources, the government is planning a nominal ‘limit’ for CO2 emissions of 173g/km. Anybody who purchases a car that exceeds the limit can expect to pay increasingly severe taxes through, it’s thought, Vehicle Excise Duty (the tax disc) and variable congestion charges.

In effect the government is saying that a diesel Vauxhall Zafira 1.9 CDTi (167g/km) or BMW 320d (153g/km) are as ‘much car as anybody needs’.

The plan has the added benefit of penalising off-roaders of all sizes. Even the Honda CR-V 2.2 CDTi returns 177g/km and few other 4x4s creep under 200g/km.

This move would also lay the foundations for much wider use of variable-charge local congestion-charging schemes. They will be based on the new ‘tag and beacon’ technology (using a charge card read by a roadside reader) that will be rolled out in London from 2008.

Central Manchester and individual busy roads such as A34 in Oxfordshire and the eastern M4 are set to be tolled before the end of the decade.

Autocar has learnt that lobby-ists Powershift and Transport for London are working on a paper that will propose that the £8 per-day Congestion Charging scheme should shift to variable charges, based on CO2 emissions. This rumour has been backed by a report last week from academics which suggests cars should be charged £3.60 per day and trucks £11.40.

‘Tag and beacon’ could also be adopted across Europe. France and Germany are switching to new number plates which are likely to have an electronic tag built in. Britain is also testing the same idea, suggesting a pan-European scheme.

Source = Autocar