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Fuel duty will rise by 2p a litre in September, only six months after the 2p increase on April 1. Tax on petrol and diesel will then rise by 1p a litre above inflation each April for the next four years, from 2010 to 2013, under increases announced in the Budget. The increases will raise an extra £3.6 billion for the Treasury over the next three years.
The RAC said that the cost of fuel for the average car would rise by £65 a year under four separate increases over the next 12 months. The end of the VAT reduction in December will add 2.5 per cent to the cost of fuel.
Having slipped below 90p a litre this year, petrol prices at the pumps are now about 95p. If the oil price remains steady, the duty increases over the next year would take the cost of petrol back up above £1 a litre.
The Treasury said that the increases in duty would encourage motorists to drive with fuel efficiency in mind, and save two million tonnes of carbon dioxide a year by 2014.
The RAC Foundation said that the increases would fall disproportionately on poorer families, who were already spending a quarter of their income running a car.
Stephen Glaister, the foundation’s director, said: “Alistair Darling talks of fairness and opportunity but his actions are completely at odds with his sentiments. Today’s move will only penalise the unemployed, who in future will increasingly have to travel further to find jobs and training.
“The Chancellor’s announcements only increase an already grossly disproportionate tax burden on drivers. The Government knows the majority of journeys on the roads are not made out of choice, but because there is no alternative way of people getting from A to B, yet ministers continue to punish a captive market.”
The AA said that motorists would be paying at the pumps for the scrappage scheme announced in the Budget.
Edmund King, the AA president, said: “Drivers will be delighted that a scrappage scheme has been given the green light. However, motorists will be furious that Mr Darling has landed a fuel duty bombshell to pay for it.”
The Freight Transport Association (FTA) said that the increases “could be the death knell for parts of the logistics sector”. James Hookham, the association’s policy director, said: “The logistics sector is the lifeblood of the UK economy and, rather than the transfusion we need, Alistair Darling has turned Dracula.
“Insolvency in the logistics sector has doubled in the last year and the number of heavy goods vehicle drivers looking for work has almost quadrupled. What more evidence does the Government need that parts of the sector are on their knees?”
The Campaign for Better Transport, which promotes alternatives to travelling by car, said: “It’s right that tax rises should target pollution but the money raised must be used to invest in alternatives. Money from fuel and aviation tax increases should be used to cut public transport fares and invest in improvements. These would help people to green their travel and create jobs now.”
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