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26/11/2008
Fuel duty is to be increased, but some planned changes to car tax have been postponed by the chancellor in his pre-Budget report.
Alistair Darling announced that plans to increase Vehicle Excise Duty (VED) for the most polluting cars would be set back by a year. Many cars registered after March 2001 still face a rise in VED from 1 April 2009, but this will now be capped at £5.
In April 2010 VED rates will increase again, but by no more than £30 rather than the maximum £90 originally planned. The new 'first-year rates', which make it more expensive to tax polluting new cars in their first year of use, will also come into effect.
From 1 December, fuel duty will go up by 2p a litre, cancelling out the benefit to motorists of the 2.5-percentage-point cut in VAT also announced in the pre-Budget report. Fuel duty will rise again twice in the following two years, reaching a total increase of 6p by 2010.
Commenting on the changes, AA president Edmund King said: "The chancellor is giving with one hand and taking away with the other.
"Increasing fuel duty whilst reducing VAT shows that the chancellor is playing roulette with global fuel prices and could lose his gamble.
"If the global price of oil increases this hike may come back to haunt the Government. It also means that when VAT reverts to 17.5% the motorist will be hit at the pumps once again."
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