Do you live in the UK? Do you drive a gas guzzler, that is, a car which road tax falls into band G? Bad news for you. Mr. Taxman, well, chancellor Alistair Darling, is going to tweak the tax system next week to give it some "green flavor." In last year's budget, the British government announced a tax increase for polluting "band G vehicles" from £300 ($603) to £400 ($804) that will take effect next month. There was also a cut for "band B" vehicles, which have lower emissions, from £40 to £35.

But there's more, because these policies will be pursued further. Let's take company cars. Britain's fleet and business market is one of Europe's largest, accounting about 2/3 of total car sales. At present, someone driving a fuel-saving car pays 15 percent tax, or 35 percent if it's a polluting car. Mr. Darling is thinking about lowering that 15 or raising that 35 percent band. There's also the treatment of mileage run up at work. At present, Britons have a single tax-free level of 40 pence per mile but the British government could introduce new bands, such as 60 p/mile for greener cars and 20 p/mile for more polluting vehicles.

Julia King, vice-chancellor of Aston University, wrote a report that predicted the "almost complete decarbonisation of road transport" by 2050. According to her, electric cars are likely to dominate the roads – although the medium-term solution would involve hybrid gas-electric vehicles and biofuels. These new electric fleet would "only" need 16 percent electric capacity generation increase. Our source article states that her report will be used as justification for the new tax measures.

[Source: Financial Times (h/t to Karl-Uwe for the tip)]