455 29 November 1994 THE BUDGET: ROAD FUEL TAXES AND VEHICLE EXCISE DUTY In his Budget statement today, the Chancellor of the Exchequer announced a number of changes in motoring taxation. The changes to rates of fuel excise duties and Vehicle Excise Duty detailed below are effective from midnight tonight. RATES OF FUEL DUTY AND VED The main features are:- - An increase in excise duty on leaded and unleaded petrol of 2.5 pence per litre (including VAT). - An increase in excise duty on diesel to eliminate the existing 0.62 pence per litre differential compared with unleaded petrol. - An increase in Vehicle Excise Duty (VED) for cars, light goods vehicles, vans and taxis from Pounds 130 to Pounds 135. This is, to the nearest Pounds 5, what would be implied by indexation. - No change in rates of VED for motorcycles and vintage cars. - No change in rates of VED for lorries. Speaking about the Chancellor's Budget proposals, Dr Mawhinney said: "The transport sector must play its part in reducing CO2 emissions, and the latest increase in fuel duties should help us to attain our target of returning carbon dioxide emissions to 1990 levels by the year 2000. "The changes also correct a historical accident which marginally favours diesel over unleaded petrol and for which there is little justification". CONTINUOUS LICENSING In July the Government announced plans to move to a system of continuous licensing for VED paid by cars, vans, taxis, motorcycles etc, based on possession of vehicles rather than usage. The system will not apply to HGVs. Continuous licensing will reduce VED evasion and secure improvements in the vehicle record, which in turn will help combat car-related crime. A consultation paper on the details will be published shortly. The Chancellor made clear in his Budget speech that the system will be designed to avoid hurting law abiding vehicle owners. WHEELCLAMPING In a further move to combat VED evasion, new powers are proposed so that vehicles parked on public roads without a valid VED disc may be wheelclamped. OTHER CHANGES Details of a comprehensive reform of the system of VED exemptions and concessions are spelt out in another press notice (No 456). In future, rates of duty on motorcycles, vintage cars and other minor VED classes will automatically change in line with any changes to the PLG or HGV rates of duty. This will not imply any increase in rates of duty in this Budget, other than those announced above. The Chancellor will permit DVLA to sell anonymised data from the vehicle record (eg. to marketing agencies). Following a recommendation by the Public Accounts Committee the Department of Transport has brought forward amendments to the Ports Act 1991 to secure the early collection of levy on the proceeds of the sale of a trust port in cases of dispute about the assessment. NOTES TO EDITORS 1. Vehicle Excise Duty (VED) is administered by the Driver and Vehicle Licensing Agency (DVLA), but decisions on rates of duty are the responsibility of the Chancellor. 2. At present 23.2 million vehicles pay the main VED rate - Pounds 130 up to 30 November and Pounds 135 thereafter. Including revenue generated from taxis and trade licences, VED on these vehicles will raise Pounds 3.2 billion in 1994-95. A further Pounds 0.5 billion is raised from 429,000 lorries and other vehicles. 3. The increases in VED for cars and light goods vehicles and related duties (see para 4) will raise Pounds 125 million in a full year (Pounds 55 million on an indexed base). 4. The rate of VED will also rise to Pounds 135 for those other vehicles, such as trailers of between 4 and 12 tonnes, which currently pay Pounds 130. Trailers of over 12 tonnes will pay duty of Pounds 370, up from Pounds 360. 5. In freezing the rates of lorry VED, the Chancellor has taken into account a number of factors, including the competitive position of UK hauliers vis a vis their European competitors. 6. Bus fuel duty rebate will continue to be paid to operators of local bus services at the following levels:- Diesel - 25.14 pence per litre; Leaded petrol - 30.58 pence per litre; Unleaded petrol - 25.76 pence per litre. 7. Details of changes to VED exemptions and concessions are contained in Department of Transport Press Notice No 456. Further information on fuel duty increases is available in Customs and Excise Press Notice No 17. Press Enquiries: 0171 276 0888; out of hours: 0171 873 1985 Public Enquiries: 0171 276 0800 DVLA Press Enquiries: 01792 782318; out of hours: 0171 873 1985 DVLA Public Enquiries: 01792 782318