The Daily Telegraph revealed earlier this year that government officials have begun private discussions with the motoring industry and drivers’ groups about an overhaul of the VED rules.
The talks come as ministers try to prevent a fall in tax revenues as more motorists choose smaller, cleaner cars that incur a lower rate of duty. Labour has accused the Coalition of planning a “stealth tax” on drivers, effectively punishing them for going green.
As people react to them then the revenue from them goes down. Leading to politicians to consider changing the structure of the taxes so as to maintain revenue: even while people are doing exactly what the tax pushes them to do.
Sadly there isn\’t really a solution to this problem. It\’s inherent in the incentives of politics itself: the desire to gain power over the maximum amount of the economy possible. The same problem will/would bedevil a carbon tax. Making a carbon tax have problems even if it is still the best available solution.