Shock eco tax plan for £2-a-litre fuel!

By Will McManus

02nd November 2009

Motorists could face fuel prices of more than £2 per litre and a £3,300 levy on new cars if new proposals are implemented by the Government.

The recommendation to triple fuel duty and introduce a £300 charge on showroom-fresh models, rising to £3,300 in 2020, is part of a £150billion package of eco taxes put forward by the influential Green Fiscal Commission (GFC).

The group says it is looking at ways of ensuring the UK meets agreed CO2 targets. But it claims moves towards alternative energy sources and improving energy efficiency will not be enough to achieve the aims, and that a blitz on ‘high-carbon’ activities is needed.

Chaired by the Government’s top environmental adviser, Lord Turner, the GFC is made up of politicians from the three major parties – and the report’s recommendations are widely supported.

It also calls for a household energy tax and claims that environmental-based measures should represent 15 per cent of the Government’s total tax take – double the current figure. However, the GFC also suggests that the increased burden be offset by cuts in income tax and national insurance contributions.

Paul Ekins, author of the report, said: “There will be winners and losers. Householders as a whole are not losing, but people who drive big cars use a lot of petrol and keep their homes hot will.” Society of Motor Manufacturers and Traders chief executive Paul Everitt told us that the GFC did not consult the industry, or take into account moves to reduce CO2. He added: “We are concerned that the report looks to raise the price of new vehicles when recovery of the new car market remains fragile.”

Professor Stephen Glaister, of the RAC Foundation, said: “To deter people from replacing their cars with cleaner versions seems ludicrous. Motorists already pay way over the odds in terms of environmental taxes in relation to the damage they cause. To penalise them further, when domestic heating enjoys a reduced rate of VAT, does not make sense. Either you hit all polluters equally or you don’t.”

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