The Budget: Fuel duties raised to reduce emissions: Petrol Tax

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The Independent Online
DUTIES on all road fuels increased by 10 per cent from last night, adding 15p to the price of a gallon of four-star petrol at the pump. The price of a gallon of both unleaded petrol and diesel oil go up by about 12p.

At the same time the Chancellor announced plans to increase road fuel duties by at least 3 per cent in real terms every year from next year as part of moves to cut emissions of carbon dioxide.

The 10 per cent rise will increase the average cost of four-star from 238.21p to 253.21p a gallon. Unleaded will rise from 218p to 230p a gallon and diesel from an average of 215p a gallon to 227p.

The Automobile Association attacked the price increases. 'We see this as a blow below the bonnet and one which will hurt low and middle car owners most.' However, British Petroleum welcomed the increase in the differential between leaded and unleaded fuel. A spokesman said it may be the final incentive for 5 million motorists whose vehicles could use unleaded but who have yet to make the switch.

Mr Lamont said the immediate increase in duties, coupled with a pounds 15 increase in vehicle excise duty to pounds 125, would raise pounds 400m for the Treasury in 1993/4. He added that by flagging plans for future increases, the Government is helping manufacturers and consumers to plan ahead while encouraging people to buy more efficient cars.

The car lobby attacked the plan for annual 3 per cent increases. The Retail Motor Industry Federation described it as 'the introduction of a carbon tax for the motor industry by the back door'.

Petrol is one of the most heavily taxed items in the UK, with about two thirds of the pump price of a four-star gallon going in petrol duty and VAT.