Vehicle tax should never have been based on emissions, because it's only one part of the equation when it comes to pollution. It's the same with resident parking permits that are starting to be based on emissions. Without "distance driven" being factored in, then it's clearly just an income generator and little to do with the environment.
There could be an argument that the fuel dut and VAT on fuel could be the "distance" element of the equation as it would directly reflect distance driven, but if you factor in that a car with high emissions would in general be less fuel efficient (there will be exceptions but emissions and efficiency are directly linked), then the Government would already get their extra tax to save the environment through VAT and fuel duty.
Perhaps vehicle tax could just be a small annual amount that can go to the local authority to help pay for pothole repairs etc. For example, there are 239k cars registered to Glasgow postcodes. A fixed £250 annual vehicle tax would bring in almost £60 million each year. The council spent over £36 million repairing potholes, over five years. Just think what eight times that amount could do for the roads.
I do wonder if a shift away from this "big pot" that the treasury has and perhaps look into ringfencing revenue would be seen as a fairer system.