Alcohol and fuel duty to increase

Alcohol, tobacco, petrol and high earners were all targeted in the Budget today.

Chancellor Alistair Darling announced that the Government will go ahead with an increase in alcohol duty of 2 per cent.

The alcohol cost increase will anger the ailing beer and pub industry which had called on Mr Darling to scrap plans for the tax rise.

The British Beer and Pub Association (BBPA) has said the increase would mean an extra 5p on the average pint of beer.

The UK pub industry is already under great pressure, with pubs closing at an average of 39 a week.

The 2 per cent rise in alcohol duty will be implemented at midnight tonight.

Tobacco duty will also go up by 2 per cent, starting at 6pm this evening.

Mr Darling said said these measures would raise more than £6bn by 2012.

Mr Darling also said that fuel duty would increase by 2p a litre in September and there would be further rises of 1p a litre for the next four Aprils.

The AA described the rises as "an unexpected bombshell", while the RAC said the announcement was "a brutal blow for motorists" and the Freight Transport Association (FTA) said the increases "could be the death knell for parts of the logistics sector".

Having slipped below 90p a litre at the pumps, petrol prices are now around 95p, with this month's planned Government fuel duty rise adding 2.12p a litre on prices.

AA president Edmund King said: "No-one was expecting another rise in September. This is a bombshell. More money will be raised from this than will be paid out in the car-scrappage scheme.

"What this means is that the scrappage scheme will be paid for in a year by motorists at the pumps."

RAC motoring strategist Adrian Tink said: "Today's announcement is another brutal blow for motorists who have already witnessed a decade of non-stop increases and price rises. It's time for the Government to stop treating motorists' pockets as a bottomless pit of money and recognise their right to drive at a fair, affordable price.

"We urge the Government to abandon its preoccupation with overtaxing motorists and instead focus on providing them with a safe, reliable, efficient road network that all concerned can be proud of.

"With the Government confirming that VAT will remain at 15 per cent until December, we expect the fuel duty hike that offset this benefit to motorists will be reversed."

FTA policy director James Hookham 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?"

Meanwhile, Mr Darling announced that income tax for anyone earning in excess of £150,000 would rise to 50 per cent from 40 with effect from next April. The change will affect the top one per cent of earners.

And from April 2011, pension tax relief would be restricted for those with incomes over £150,000.