Experts are queuing up to warn that Labour’s recent road tax hikes will depress the used car market.
The government recently introduced a ‘retrospective’ £245 increase in tax for higher emission cars bought between 2001 and 2006.
This covers many family cars such as the Ford Mondeo and Renault Espace as well as 4×4 ‘gas guzzlers’ and is designed to be the stick in a carrot and stick approach to encouraging more green motoring.
When Gordon Brown announced the move he assured parliament that the majority of drivers would benefit from the plan but his own treasury figures show that less than 20 per cent will be better off as a result.
This has led to the new vehicle excise duty being described as ‘the poll tax on wheels’ by the 50 Labour MPs who have supported a Commons motion calling for the retrospective tax to be axed.
Independent car reviewers Parkers calculate that the rise in tax will knock at least £500 off the resale value of cars. Industry body Cap thinks that the cost will be nearer £1,000 in terms of lost value.
Justine Greening, shadow Treasury minister, said: "People face an impossible situation.
"They can’t afford to fill up their car because of fuel duty, they can’t afford a new car because of the credit crunch, and even if they could, now they can’t even sell their old car because government road tax hikes make it worthless."