Chancellor could increase fuel duty for diesels while cutting petrol tax
DIESEL drivers could face a fuel duty tax rise in the Budget while petrol motorists enjoy a cut under plans being considered by the Treasury, The Daily Telegraph understands.
A number of options are under consideration, including changes to vehicle excise duty which could hit drivers who already own diesel cars instead of those who buy new models.
Philip Hammond wants to be seen as the green Chancellor, sources close to the Treasury said, and he is under pressure from Cabinet colleagues to announce plans to curb dangerous emissions in his Budget this month.
Michael Gove, the Environment Secretary, reportedly wants extra charges to be levied on anyone who buys a second-hand diesel car if they live in an area with high levels of emissions. This would go further than existing plans to increase duty on new diesel cars.
The clean air strategy hinted at a new diesel tax and Mr Gove is understood to have asked officials to explore how such a levy could work.
The extra duty could be paid by the new owner when a change in ownership was registered, it is understood.
Another option would be to increase fuel duty for those who drive diesel cars to encourage people away from the technology before a ban on new models. In an effort to sway public opinion in favour of the controversial decision ministers are understood to be considering plans to cut fuel duty on petrol vehicles at the same time. The tax has been frozen in successive Budgets because the prospect of increasing it prompts fury among driving groups.
Campaigners fear a fuel duty rise would damage small businesses as lorries and vans run on diesel – adding to already rising costs.
A number of senior Conservative MPS have also warned against such a move, including Rob Halfon, a former Government minister. He said the country needed a “defence minister” for motorists, not for their wallets to be hit hard with new taxes.
Edmund King, the president of the AA, said: “It is ridiculous to further demonise diesel via differential taxes when drivers are already voting with their wheels. Some 41 per cent of AA members own diesels but that drops ... to 16 per cent when drivers are asked what fuel their next car will run on.”
David Bizley, the RAC’S chief engineer, dubbed the plan “a terrible, misjudged knee-jerk reaction”.
The reports comes amid claims that Mr Hammond is shielding his Budget plans from No 10 in a bid to block calls for him to loosen the purse strings. A senior Government source however dismissed reports of tension between the Prime Minister and her Chancellor last night. The two are said to be working closely on the Budget.