Brown's zero road tax is a non–starter

Despite being trumpeted by the Chancellor as proof of his green credentials, the move to introduce a zero rate of vehicle excise duty for the least polluting vehicles will not affect any new car on sale, it emerged yesterday.

To qualify for the new lower rate of tax, a new car must achieve a pollution rating of below 100g of carbon dioxide per kilometre travelled on average. The two models most often cited as benefiting from the change are the Honda Insight and the Smart ForTwo Diesel.

However, the Honda Insight was removed from sale last year and the diesel- engined Smart has never been officially imported into the UK. All other conventional "green" vehicles, such as petrol-engined Smarts, the Toyota Prius and Honda Civic IMA hybrid models and various small Citroëns and Daihatsus, just miss the 100g/CO2 threshold. Some electric cars with zero emissions have been zero rated for some time, so there is no change in their treatment.

The move to cut tax on smaller cars generally will see savings for many drivers and be balanced by the rise in tax for the most polluting cars. However, the only group of car owners to see a saving as a specific result of the zero-rated band are the few who bought the Insight. Some 159were sold between 2001, when the CO2-related tax system was introduced, and 2005, when the Insight was deleted from Honda's range. Each owner will save £55 a year on car tax, and so the total loss to the Exchequer as a result of the new band will be £8,745 at most.