Daily Mail

Drivers face fuel tax hike on diesels they were urged to buy

- By Jason Groves Political Editor

DRIVERS of diesel vehicles were last night warned to brace themselves for a rise in fuel duty in tomorrow’s Budget.

The Petrol Retailers Associatio­n said it had been told that Chancellor Philip Hammond will increase duty on diesel by 1p a litre – the first rise for more than seven years.

The PRA, which represents 70 per cent of forecourt operators, said petrol duty would be cut by a similar amount in a bid to encourage motorists to move away from diesel cars, which are blamed for air pollution.

The move would raise an additional £800million a year for the Treasury because of the widespread use of diesel by the haulage industry.

The Chancellor is also said to be considerin­g measures to raise the cost of buying new diesel cars – either through a higher rate of VAT or through a specific new levy.

It comes after drivers were for years encouraged by Tony Blair’s government to buy diesel cars. Labour used generous tax breaks to persuade millions to switch to diesel.

At the time, scientists said they were better for the environmen­t because they generated less carbon dioxide than petrol vehicles.

But scientists now say that diesel cars are worse for the environmen­t and a bigger health risk than petrol vehicles because they emit larger amounts of toxic nitrogen oxide, which has been linked to respirator­y diseases.

Last night, Brian Madderson, chairman of the PRA, described the proposed move on fuel duty as a ‘thinly-disguised tax grab using air quality issues as justificat­ion’.

He added: ‘We have repeatedly warned the Chancellor against such an economical­ly regressive move because it will push up prices for consumer and businesses already suffering with inflation at a five-year high.

‘To force this increase at a time when crude oil and worldwide wholesale costs are ramping up, is also at odds with the Government’s avowed aim of supporting the UK economy in the lead up to our formal exit from the EU in 2019. Does the Chancellor really want to hammer already hard-pressed consumers, dam age the economy, and make us less competitiv­e with our European neighbours?’

The Treasury has refused to comment on fuel duty ahead of the Budget, but Mr Madderson said informatio­n about the planned increase had come a ‘ well-placed source’ at Westminste­r. Fuel duty has been frozen since 2010 and Mr Hammond has been under intense pressure to maintain the freeze at a time of rising inflation.

But some at the Treasury believe they could continue to claim the freeze was in place if a rise in diesel duty is balanced by a cut in petrol duty.

Motorists already pay around 78p in tax on a litre of diesel, costing just under £1.23. This includes 57.95p in fuel duty as well as VAT.

Diesel drivers have already been warned they face the threat of higher taxes in the Budget as the Government tries to meet its air quality targets.

The Treasury has examined plans to raise vehicle excise duty on all diesel cars.

But the Chancellor has been warned by senior Tories that raising VED on all diesels would be seen as punishing drivers who bought their cars in good faith at a time when the Government was encouragin­g people to choose diesel vehicles rather than petrol.

In his 2001 Budget, Gordon Brown, the then Labour chancellor, cut low- sulphur diesel duty by 3p to reward drivers of diesel vehicles. The tactic – which aimed to help Britain hit EU carbon emissions targets – contribute­d to the number of UK diesel drivers jumping from around 1.5million a decade ago to about 11million today.

‘Thinly-disguised tax grab’

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