The way your car’s tax is calculated could soon change, as the Treasury has announced it is considering alternatives to Vehicle Excise Duty. VED in its current form was introduced in 2005, replacing road tax and banding cars based on their CO2 emissions, the idea being to incentivise the purchase of ‘greener’ cars.However, cars are becoming so fuel efficient (CO2 emissions are linked to fuel consumption) that the Government has started to panic about its VED revenue tanking.

So, new and improved ways of taking money from car owners are being considered – one of them, according to The Telegraph, being a single up-front charge when a new car is bought.

What it will be based on is unclear, although it’s likely to be a similar combination of list price, fuel type and CO2 emissions as is used to calculate today’s VED and company car tax liability.

Figures quoted by the BBC indicate that if VED remains as is, the Government’s tax take will fall from 0.4% of GDP to 0.1%; today, the Government takes around £6bn annually from VED.

Speaking in the House of Commons yesterday, Treasury Minister Chloe Smith said: “The government announced in the Budget that they will consider whether Vehicle Excise Duty should be reformed to support the sustainability of public finances and to reflect the improvements in vehicle fuel efficiency. The government will, of course, seek the views of motoring groups before taking any decisions.”

Obviously, motoring groups will strongly resist any move they perceive as another thrashing for ‘the beleaguered motorist’ (whoever he is).

And also obviously, Labour has already pounced on the Government for planning a “stealth tax,” even though the Government hasn’t announced any sort of plan whatsoever.