First I have heard of it but after researching further it makes a lot of sense. Until 2017 VED was on CO2 emissions and I don't see why that shouldn't continue. UK drivers are buying bigger and bigger cars.
Yea the older system seemed fair in all honesty, but then again the old old system based on engine size was also fair, given that larger engines use more fuel, and are usually fitted to larger vehicles. Note the Ford mustang gt example, they don't mention that under the current system, the tax drops to just £145 after the luxury tax has been paid the first few years, meaning somone in a 1.0 litre hyundai pays the same as those in a 5.0 V8.
I think they should just drop road tax altogether, given how much tax we pay on fuel, we are technically paying "pence per mile" so the less efficient car, the more tax you pay. But hey, the government is greedy and the country is broke so...
At one time in the UK, the taxation for motor vehicles was based on the total bore of the engine. This led to UK engines (We designed and built our own back then. Austin, Morris, Riley, Et Al.) having tiny little bores, and huge long strokes, with very low revs.