MOTORISTS who drive the most popular brands of family cars will be stung for major increases in motor tax under changes to the system next year.

Owners of popular brands, including Ford, Volkswagen and Toyota, face the prospect of massive increases in their motor tax bills.

The Government believes too many cars are falling into lower tax bands, based on carbon emissions, which were introduced by the previous administration.

Finance Minister Michael Noonan and Environment Minister Phil Hogan have agreed radical change is necessary to reverse plummeting tax revenues, with one possibility being to link vehicle size and emissions for the first time.

Vehicles might range from small (Ford Fiesta), family (Toyota Avensis), to executive (Range Rover), and each group would pay different tax rates based on a combination of emissions and engine size.

The current system based on emissions has been criticised by some, including the AA, as unfair because it disregards the cost and size of cars, meaning drivers of larger vehicles enjoy the same tax rates as smaller ones.

The planned changes would mean a massive financial hit for drivers of cars such as the BMW520d diesel, which qualifies for the lowest tax band despite having a two-litre engine.

But even motorists with more modest cars in the 1.4-litre or 1.5-litre bracket will have to pay a lot more. They enjoyed motor tax savings of around €200 after the 2008 changes, but new proposals would swing costs back the other way.

Company fleets would suffer badly from this type of change as they predominantly use cars with diesel engines in the 1.6-litre to 2-litre range -- as do tens of thousands of families countrywide.

Motor tax rates have already increased at twice the rate of inflation since 2001 -- by up to 45pc compared with an increase in the cost of living of just 24pc.

Drivers who were recently hit with increases of more than 50pc in their motor tax bills in December's Budget now face the prospect of further significant costs.

Everything from mid-size family cars up to luxury models are earmarked for hefty increases across the board.

This is because all cars have become 'greener' thanks to sweeping technological advances in the face of EU emission regulations.

When the previous coalition of Fianna Fail and the Greens introduced changes in 2008, ministers were told that revenue could drop off because the technology could be applied to all engines.

In practice, it transpired that 90pc of all new cars bought since 2008 (around 295,000 of the 334,000) have fallen into the lowest three tax bands -- A, B and C -- which cost a maximum of €330 per year.

Desperate

For example, the BMW 520d diesel costing more than €45,000 qualifies for the lowest tax band, as does a Toyota Yaris, which costs just €15,000.

Luxury car makers would argue that drivers should not be punished for a beneficial technology. But the desperate need for revenue means the Government has had to re-assess the system.

Revenue fell to €988m last year, a drop of €72m from the peak in 2008. In response, the new Fine Gael-Labour administration increased motor tax across the board.

But while the rise averaged just 7.5pc for some of the higher-emission bands, the common A, B and C bands were hit with increases of up to 54pc.

This was designed to act as a "statement of intent", according to correspondence between Mr Noonan and Mr Hogan, seen by the Irish Independent.

They now plan further increases which will impact on thousands of motorists.

It is understood that only drivers of much smaller, super eco-friendly cars will escape the worst. Owners of expensive, high-performance vehicles will be hit with massive road-tax bills.

By the same token, many average family cars will also be affected as the tax bands are changed to more closely resemble the old system, which levied the charge based on engine size.

"This is about trying to strike a balance between Joe Soap buying an ordinary car and someone with lots of money who buys a high-performance car," one source said.

"The new bands could be based on emissions and other criteria like engine size."

Officials have warned that unless the bands are changed, revenue from motor tax will drop by more than 50pc by 2030.

Irish Independent