PLANNED increases to Vehicle Excise Duty (VED) are a "ticking timebomb" which are provoking as much anger in the country as the abolition of the 10p tax rate, the Tories have claimed.
The party said the changes will mean 3.7 million people will lose £90 per year when the changes come into force and overall, more than one million families would see their tax double.
Shadow chief secretary to the Treasury Philip Hammond called on the Government to abandon the planned increases and said ministers had "plumbed new depths of cynicism."
Mr Hammond, in a Tory-led debate, said the motorist was "under assault in many directions" and that many people on low incomes, larger families and retired people would be hit as they were more likely to own older cars.
In his Budget speech in March, Chancellor Alistair Darling set out "a major reform to Vehicle Excise Duty" which he claimed would "encourage manufacturers to produce cleaner cars".
By introducing new bands of tax there would be "an incentive to encourage drivers to choose the least polluting car".
Under the new system, which comes into effect next year, there will be 13 bands ranging from A to M. Vehicles will be classed based on carbon emissions with owners of cars in the top band - band M - paying £440 in tax. The most polluting new cars will pay a showroom tax of up to £950 starting in April 2010.
But the Treasury is also abolishing exemptions from the highest rate of tax for older cars. This means that owners of larger cars bought since March 2001 will find that their road tax will rise steeply from next April, the Tories claim.
A Commons motion put down by Labour's Ronnie Campbell (Blyth Valley) expressing concern at the retrospective changes to VED and calling on the Government to reconsider has been signed by 25 MPs, including 18 Labour MPs.
The Tories are calling on the Government to drop the planned increases and "believe that any increases in environmental taxes should be offset by tax reductions elsewhere".
Mr Hammond said: "The measures announced by the Chancellor on VED in the 2008 Budget are a ticking timebomb under his successor for 2009, just as surely as his predecessor's Budget was primed to explode under him."
Referring to the changes in the Budget, Mr Hammond said: "The creation of a new and complex regime of VED with 13 bands, raising the duty payable on many family cars and all of it dressed up as an environmental measure aimed at gas guzzlers, nothing whatsoever to do with filling a bankrupt Treasury, nothing to do with taxing ordinary motorists, that was the message being sent."
He said the percentage increases in VED on a Nissan Micra were larger that the percentage increase on a Porsche Cayenne or a six-litre Humvee.
He said: "This in truth is an old-fashioned revenue raising measure. At a time when families are struggling to make ends meet, the Chancellor has hit them with a more than doubling of VED between 2006/07 and 2010/11, from £1.9 billion to £4.4 billion.
"This is at a time when the average motorist is already contributing more than £1,800 per year in tax."
He added: "Because of the unannounced reversal of the highest bands of VED announced in the 2006 Budget for vehicles registered before March 2006, more than one million families will see their car tax double over the next two years."
He added: "3.7 million motorists will lose £90 per year or more. Not far off the average loss from the abolition of the 10p tax rate."
Mr Hammond said motorists who owned older cars would not be able to change their behaviour because they couldn't afford new cars.
"These measures will lock low-income families into the worst possible position. By reducing the capital value of the vehicle they own, the Chancellor will be trapping them in what is effectively the motoring equivalent of negative equity.
"Unable to change the vehicle they drive because its value has collapsed, yet forced to pay the Chancellor's punitive taxes to stay on the road."
Mr Hammond said the Treasury's own figures showed the change would have "virtually no impact on CO2 emissions".
It was a measure that will "damage not enhance" the environmental agenda in the country.
He warned the Government that when the changes are introduced they could be "next year's 10p tax debacle".
Treasury Financial Secretary Jane Kennedy insisted the change will encourage motorists to choose cleaner cars.
She added: "Many drivers of family cars will be better off as a result of these changes, including 24 of the most popular 30 models of cars in the country."
These include popular versions of the Ford Focus, Renault Clio, Vauxhall Astra and Citroen Xsara Picasso.
But, she said: "It's true that drivers of other versions of those models could pay more."
However, Labour backbenchers attacked the move, arguing that it will affect drivers in rural areas and owners of older cars who cannot afford to change models.
Albert Owen (Ynys Mon) said: "In my constituency, for instance, where car use is absolutely essential for everyday living for many families, we are already paying a burden for fuel at the pump at the moment.
"This extra, required for cars between 2001 and 2006 purchase, will be an extra burden on that.
"There are areas that seem to have a double whammy when it comes to running their cars."
Martin Salter (Reading W) told Ms Kennedy: "You have rightly talked about allowing people to make choices to cut their VED by 2010, but that is predicated on the assumption that people have enough money in their family budgets to change their car before 2010.
"A lot of people that you and me represent do not have that disposable income. That is the nub of the problem."
And Rob Marris (Wolverhampton SW) said a "better way" to change behaviour, would be to have a "prospective tax change rather than a retrospective" one.
Ms Kennedy said she had been "listening" to the comments about the retrospective changes and added there will be "ample time" to discuss the measures before the 2009 Finance Bill.
Ms Kennedy denied the move amounted to a "stealth tax" and insisted fuel duty had fallen, in real terms, by 16% since 1999 and the cost of motoring had fallen, in real terms, by 11% since 1997.
"It may not feel like that to motorists but we have to respond to the facts as they stand."
She said the VED changes were forecast to save 1.3 million tonnes of CO2 by 2020.
Liberal Democrat deputy leader Vince Cable said he agreed with the Tories that the changes had not been introduced with "great clarity" and it was wrong to "attack" existing vehicles, rather than new ones.
But he could not agree with the call for ministers to abandon the changes as a whole.
Mr Cable said that while the real cost of motoring had fallen, the cost of travelling by train or bus had risen due to the system being "heavily geared" against public transport.
"There is a strong argument for moving away from VED as the main instrument of trying to change behaviour on the roads."
Road-user pricing, he said, was probably the best option, in the long run, for replacing VED.
Mr Salter pleaded with ministers to alter their plans. He said: "Please reflect carefully on the sheer unfairness of the retrospective nature of these proposals.
"There is time to make amendments, there is time to get this right, there is time to do the right thing by the environment without hitting some of the people that we came into politics to help and support."
Winding up for Tories, Justine Greening said: "The reality is this Government is now hitting those people again who can least afford it and also least change their behaviour."
Exchequer Secretary Angela Eagle said: "The majority of low income families will either be unaffected or better off.
"This is not a tax rise for most motorists, nor is it a tax rise which hits the poorest, nor is it a tax rise which hits the average family car."
Lower income families would not be hit by the changes because they were less likely to own a car, Ms Eagle pointed out, and those that did were more likely to own vehicles from before 2001 which are unaffected by the changes.
The Tory motion, which called on the Government to abandon the planned VED increases, was defeated by 284 votes to 125, majority 159.
