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Finance Bill

I do not want to get too far off the beaten track, Mr. Atkinson, but for a person who earns £200,000 a year, the Government's proposal to introduce a 50p rate of tax on incomes over £150,000 a year could be called retrospective, on the basis that that person could not have anticipated the change when he accepted a job offer in the first place. It was argued that the proposals on VED were no more retrospective than the example that I have just given because, if that example was seen as retrospective, whole areas of the Finance Bill would be deemed to be unacceptable. I was not entirely sympathetic to that argument. I understood it, but I felt that any attempt to effect behavioural change by using VED differentials meant that the tax change also had to impact on people buying cars for the first time. They had to be in a position to make important decisions about such a purchase and so they had to know the VED rates that they would face. It is important that we examine these matters in detail, but the danger is that we lose sight of the big principle, about which all parties are essentially in accord. We may differ on the degree, but we accept that there must be some differential between the lowest polluting cars and the highest, and that that differential should be graded. My party argued for that differential before the Government introduced it in 2001. We had made the case forcefully for many years before then, and I remember that we were sometimes criticised for doing so. However, the notion of having a differential seems now to have become the accepted wisdom. Why is a differential deemed to be a good idea? Transport clearly contributes to CO2 emissions and pollution. It is only one contributor among many, but it is significant, so encouraging people to use more fuel-efficient models of car is deemed to be in our collective environmental interest. It is also worth noting in passing that the principle is being applied more widely. London's congestion charge may be rather inaccurately titled now, but it contains an element of the principle. Interestingly, residents' parking in the Taunton Deane borough council area in my constituency will be free for people whose cars are in the lowest category of emissions, and half price for those whose cars are in the second lowest category. Instead of disincentivising people with high-emitting cars, the scheme incentivises people with very low-emitting cars, and that is a sensible and practical change. My point may be slightly off the beaten track, but incorporating a component in VED that attempts to affect people's environmental behaviour is widely accepted to have merit. If it is not retrospective, one would hope that the impact would be of even greater benefit to the environment, and that the population at large would deem the tax to be fairer. In the past, my party has spoken about the impact of VED rises on very rural areas, something that always comes up in these debates. People in such areas need to use cars—