Petrol tax 'to rise'

The annual petrol tax rise was delayed because of the Iraq war

A rise in petrol tax of just over a penny-and-a-quarter a litre will be imposed in October following a freeze because of the Iraq war, it has been reported.

In his Budget in April, Chancellor Gordon Brown delayed the planned rise because of the "high and volatile level of oil prices" caused by the conflict.

The Daily Telegraph quoted a Treasury spokesman as saying that it "would not be unreasonable to assume" a 1.28p rise would go ahead from 1 October, as the international situation had improved.

Shadow Chancellor Michael Howard has criticised the potential increase as "another stealth tax" and suggested it could be the first of many rises in duty as the chancellor tries to cut government debt.

The government is continuing its path of spending and failing Michael Howard MP

A clause in this year's Finance Act allows Mr Brown to make the levy without further approval from Parliament.

However, analysts said an autumn tax hike would not affect motorists too badly, as petrol prices had dropped as Iraq began to recover its production.

Mr Howard said: "The government is continuing its path of spending and failing. Sooner or later Labour will put up taxes again.

"Despite tax rises and a worsening deficit, we are not seeing the improvements in services that were promised."

'Wallets hit'

Both the AA and the RAC motoring organisations said a rise would penalise drivers already suffering from rising costs of running a car.

An AA spokesman said: "Mr Brown deferred this rise in the Budget because the situation in the Middle East was so volatile.

"If he puts it up now, that implies that he thinks the situation has stabilised.

"We don't think it is stable at all, it is still very volatile. We would disagree with any rise at the moment."

An RAC spokesman added: "Motorists would see this cost rise hit their wallets immediately.

"It is something that the motorist will not be happy with."

A Treasury spokeswoman told BBC News Online on Saturday that no decision had been made on a rise in duty.

Petrol in the UK currently costs an average of 76.2p for a litre of unleaded, with duty making up about three-quarters of the price.