Page last updated at 12:50 GMT, Friday, 4 July 2008 13:50 UK

Call for review of motoring taxes

Gordon Brown before the Commons liaison committee
Prime Minister Gordon Brown hinted at changes to the proposed duty

A root and branch review of motoring taxation in the UK should be carried out by the Treasury, says motorists' organisation the RAC Foundation.

The group says that freezing fuel duty would simply be a "populist" move and have little effect on the growing costs facing motorists.

Prime Minister Gordon Brown said the delayed 2 pence rise in duty would soon be looked at "very, very carefully".

Rising motoring costs have prompted protests by hauliers and other drivers.

There has been speculation that the government will use this autumn's pre-Budget report to shelve the planned rise in fuel duty.

Delayed rise

The increase in duty, which had been due to be introduced in the Budget on 12 March, was delayed for six months because of record crude oil prices.

Those costs have continued to climb, with the price of Brent crude oil hitting a record high of $146.69 a barrel for the first time in London on Thursday.

The RAC Foundation said sustained high oil prices had significantly affected family spending, and motorists were "paying more and more for an ever-poorer level of service".

"The chancellor may pull a populist rabbit out of the hat by scrapping the October 2p rise, but this will be a drop in the ocean compared to his plans to take an extra 2bn from the road users' pockets by 2011," said RAC director Stephen Glaister.

Tax and spend

The RAC claimed that income from motorists was broadly equal to spending on the road network in 1975, but the government now brought in four times as much from the motorist than it spent on the roads.

Petrol pump
Prices at the petrol pumps have increased, prompting protests

It criticised the levy on road users being described as measures to protect the environment.

Liberal Democrat transport spokesman Norman Baker backed the call for a review of motoring taxes, claiming that the "current system isn't working" and that it hit those with no alternative than to use the car the hardest.

Shadow Chancellor George Osborne said it would be "very surprising" now if the government pressed ahead with the 2p rise in fuel duty - as previous "less significant" rises in fuel prices had prompted them to freeze it.

But a Treasury spokesman said: "Motorists are paying 13% less in real terms in transport taxes than in 1999, and transport spending has increased by 70% since 1997.

"The government is conscious that motorists are feeling the pressure from high fuel prices, which are being driven by changes in the international price of oil.

"The chancellor postponed the planned increase in fuel duty in April because of his concern about the impact on motorists, and has said he is willing to postpone it again in October if he judges it to be right."

Brown hints at fuel duty freeze
03 Jul 08 |  UK Politics
Brown appears before MPs
03 Jul 08 |  UK Politics
London oil price hits $146 record
03 Jul 08 |  Business
MPs gear up for car tax challenge
02 Jul 08 |  UK Politics

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