Fuel duty rise postponed as Darling rewards low emission drivers

CHANCELLOR Alastair Darling today postponed April's 2p per litre fuel duty rise but added an extra 0.5p rise from 2010.

Mr Darling also announced plans to encourage drivers to use environmentally friendly vehicles by saying that owners of low polluting cars would pay no vehicle tax for the first year from 2010.

This will involve new bands of vehicle excise duty (VED) for newly manufactured low-emitting cars.

From April 2010, there will be no VED in a car's first year if it emits less than 130 grammes per kilometre of CO2.

But he announced higher first year rates of tax for the most polluting vehicles and said the 100% allowance for low emission company cars would be extended for a further five years.

The most polluting vehicles will face a £950 “showroom” tax that will come into effect from April 2010.

The government is also introducing a new top band for the most polluting vehicles that emit more than 255g of carbon dioxide per kilometre.

The postponment of the fuel duty rise for six months until October had been widely expected following pressure from groups including hauliers who said it could put them out of business.

But the decision will irk environmental campaigners who believe the duty will help to reduce the number of vehicles on the road.

Yet British Chambers of Commerce director general David Frost said the Government should have gone further and scrapped the planned rise completely

and added that rocketing oil prices meant the Government was already benefiting from increased duty receipts.

Mr Darling said he had decided to delay the rise in fuel duty because he wanted “to support the economy now and help business and families”.

Richard Wilson, senior manager at Baker Tilly in Leeds, said: “These issues are an easy win for the Chancellor. Green taxes are an easy hit. But he put a lot of spin on it by encouraging manufacturers to build low emission cars.”

AA president Edmund King said: “This temporary relief should quell any panic at the pumps. The Chancellor has listened to us and made a sensible decision.

“The proposed increase would have taken fuel prices to new record levels. Two pence might not sound like much but when it is added to the 20p-a-litre

increase in pump prices in the last year it could have been the last straw for many motorists and hauliers.

“If fuel prices remain at records levels in the autumn the increase should be scrapped.”