The Chancellor seems to have found another method of collecting even more of our money, this time as a retrospective tax. From next year, there will be higher Vehicle Excise Duty on most cars registered after 1st March 2001. In some cases (for example at 190 g/k, of CO2) the increase will be almost 24%; from £210 to £260.

The ‘excuse’ for the increase has been to influence decisions about what cars we drive, to encourage use of lower carbon emission engines.
In theory, this form of "social engineering" may be acceptable, in terms of protecting the environment.

It is a retrospective tax becasue it applies to purchasing decisions made up to seven years ago, not to current and future decisions.

If you bought a new car in (say) 2006, which was in old tax band F, it will fall into new tax band J from next year; but short of selling the car and making a significant loss, there is nothing you can do about it. This is particularly galling to those who bought diesel cars in the belief that this was better for the environment (and are now paying much more for their fuel too).

The new VED charges have nothing to do with influencing buying decisions; were this to be the case, it would apply only to new cars. It is about raising tax. This makes thinking about the tax efficiency of your Investment Portfolios even more important.

Have your say ...
What do you think? Should tax be used to control how we behave, or should the government leave use more of our own money and let us decide how to live?