Updated: 08/10/2012 04:22 | By motoringresearch.com

£23k ‘gas guzzler’ tax for large-engined cars

Purchasing that latest Porsche could cost you more than you think under new rules

£23k ‘gas guzzler’ tax for large-engined cars

Buyers of sports cars and other high polluting vehicles could face a new purchase tax of up to £23,000, according to new proposals drawn up by government advisor Tim Leunig.

Mr Leunig’s plans have been backed by Energy Secretary, Ed Davey, as the government looks to reform the nation’s current Vehicle Excise Duty – or road tax – system.

The cheapest new cars with free VED road tax

Cars tax guide

The proposal uses a sliding scale based on a vehicle’s CO2 and other polluting emissions similar to the existing VED situation. However, instead of a yearly sum paid to drive your car, a one-off tax cost would be added to the purchase price of a vehicle.

This would mean cars deemed to be the most polluting would attract a tariff of £23,050. Mr Leunig’s report estimates around 150 luxury models, totalling sales of over 5,400 cars per year, would face a penalty of £10,000 or more.

Interestingly, the project to reform VED in the UK would see the money gained through the new tax used to subsidise the purchase of highly efficient small cars, by up to as much as £750.

It would also significantly modify vehicle prices: a 1.25-litre petrol Ford Fiesta would increase in price from £9,084 today to £10,734, whereas a 1.6-litre turbodiesel variant of the same vehicle would actually drop in price, falling from £11,845 to £11,495, and closing the gap between the cost of diesel and petrol cars.

The government is looking to revitalise the UK’s VED setup to prevent falling revenue as drivers increasingly turn towards smaller, more efficient vehicles.

Road tax currently accounts for £6 billion per year of Treasury funds, however, the Office of Budget Responsibility has cut its forecast for VED revenues by £100 million per year, every year from 2014 as a result of the mass move towards greener vehicles.

The cheapest new cars with free VED road tax

Cars tax guide

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