Car tax increases 'should be bolder'

Government plans to increase car tax on high-emission vehicles should be bolder, a Conservative MP has said.

Tim Yeo, chairman of the Environmental Audit Committee, has said that the cost difference between car tax bands is not enough to make people chose cleaner models.

Yeo told BBC One's Breakfast that people "need the biggest possible incentive" to switch to low-emission models. "That's why the Government should be even bolder – really penal rates for high-emission cars and really attractive 'carrots' so that tax is almost nothing on the greenest models," he said.

Phil McCabe from the Forum of Private Business said that small businesses will struggle to cope with the "significant costs" associated with the tax changes.

"Offering more significant financial 'carrots' – such as reduced rates for investing in fuel-efficient vehicles – is a welcome suggestion," he told More Than Business News. "But these would likely be undermined by hitting businesses harder with steeper taxes should they be unable to meet the cost of replacing their older fleets.

"The committee and the Government should be looking ahead and supporting the smallest firms through this transition, especially during the current economic downturn, without the threat of these additional taxes."