Ian, yes tweaking the RFT does have an impact on the types of cars people buy and drive... in fact more so than adjusting tax on fuel.
Interestingly, the Irish had a system like that for decades. It was replaced with an emissions based system in 2008. The Irish system used to be based on engine capacity, the larger the engine, the higher the tax. In relative terms this skewed the percentage of smaller engined to larger engined cars when compared to the UK. Ironically, being priced out of driving a fast car was one of the reasons I emigrated 20 years ago !
There's a calculator on the link below to show you how it works - a 3.5 litre car has an RFT of EUR1,683 whereas a 1.0 litre car has an RFT of EUR185. Just select cars older than 2008.
Something more sophisticated could be implemented based on the make/model etc...
Yes power generation and heating consume much more fuel than is used on the roads... and of course the duty there is different. Sorry I should have clarified, I meant fuel used for transportation.
http://www.vrt.ie/roadtax.php
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