HR Industry News

Budget speech forecasters predict fuel tax increase delay

— 11 March 2008 —

Chancellor Alistair Darling presents his first annual UK Budget tomorrow, and may announce a delay to the planned rise in fuel duty, sources say. Fuel duty would normally be expected to rise by 2 pence per litre in April but lobby groups have been pressuring the government to scrap this, as petrol prices are already soaring. However, there is a fine margin between respecting voter concerns about the rising price of energy and addressing environmental issues. Darling may choose to follow in the footsteps of Gordon Brown, who previously delayed proposed increases in fuel tax when oil prices were high - although the final decision has not officially been revealed.

According to news agency Bloomberg, the Chancellor will also consider eliminating a tax break on biofuels. Reports indicate that Darling may scrap a 20-pence (40-cent) tax break on a litre of fuel from plants because, in some cases, producing those crops may harm the environment more than burning fossil fuels. The government instead will rely on existing plans to require gasoline and diesel fuel to include 5 percent biofuel by 2010.

The plan is part of Prime Minister Gordon Brown's effort to reduce emissions from cars by 2030 and to improve the state of the environment. Darling's budget statement tomorrow also may encourage the building of environmentally-friendly homes and limit the number of plastic bags given away by supermarkets.

Also rumoured to be on the list to be addressed are: National Insurance, Capital Gains Tax and savings. Many of the major changes, including the changes to the basic rate of tax and tweaks to National Insurance, have already been released, but others, such as an increase in taxes on fuel, alcohol and tobacco, are widely expected. Darling is also expected to raise vehicle excise duty rates in a bid to encourage people to drive more energy-efficient cars.

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