Budget: Smokers and drinkers hit but fuel rises frozen

Smokers and drinkers were hit in the pocket today as Chancellor Gordon Brown sought to balance the Budget books.

In an upbeat Commons statement, he predicted a rapid economic bounce back with consumer spending set to pick up as the war in Iraq draws to a close.

But with £3 billion being set aside for the costs of the military conflict, he announced increased duties on cigarettes, beer and wine.

From Monday a packet of 20 cigarette will rise by 8p while beer drinkers will pay 1p a pint extra and a bottle of wine will go up by 4p. But duty on spirits, cider and sparkling wine was frozen.

Mr Brown said the 1.28p a litre revalorisation of fuel duties would be deferred until October 1.

He added that if the current international uncertainties and volatility remained, he would not proceed with the change at all.

Vehicle excise duty rates for lorries and motorcycles would be frozen.

Excise duty rates on cars and vans would be raised by the normal inflation rise of £5 from May 1.

The Chancellor said there would be a new tax disc rate, priced £110 lower than the standard rate, to encourage the development of the least polluting cars.

Bio-ethanol duty would also be reduced by 20p per litre from January 1 2005.

The Chancellor announced that from January 1 next year, and for all contracts completed from today, Petroleum Revenue Tax will be abolished on new tariffing business in the North Sea.

He said that he would raise the exemption for Inheritance Tax from £250,000 to £255,000, which would mean that 95 per cent of estates would pay no tax.

Income Tax rates and allowances would remain the same.

Bingo Tax would be abolished on August 4, replacing it with a 15 per cent gross tax on bingo company profits.