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Excise duty on main road fuels, being ultra low sulphur (ULS) and sulphur
free (SF) petrol and diesel, will rise by 2p per litre on 1 October 2007,
which is an increase of just over 4% on current rates. Further increases of
2p per litre will take effect on 1 April 2008, and 1.84p per litre on 1
April 2009.
The same increase of 2p per litre will apply to biofuels (biodiesel and
bioethanol) as a result of the Chancellor’s decision to maintain the
existing duty differential of 20p per litre between main road fuels and
biofuels.
Rates of excise duty on other road fuels including non-ULS and non-SF
unleaded and leaded petrol will also increase by approximately 4% on 1
October 2007. In the case of unleaded this amounts to 2.13p per litre,
rising from 51.52p to 53.65p per litre. Duty increases on these fuels from
2008 onwards will be determined when consideration has been given to
simplifying the duty rate structure.
Non-road fuels subject to rebated rates of excise duty will also increase by
2p per litre on 1 October 2007. This measure will maintain the existing duty
rate differential between rebated and unrebated oil products.
When used as a road fuel, the rate of excise duty on liquefied petroleum gas
(LPG) and natural gas (including biogas) will increase by 4.28p per kg and
2.89p per kg respectively on 1 October 2007. The existing duty differential
applicable to biogas will remain at present levels at least until the Budget
of 2012.
Our view
By confirming future duty rate increases on road fuels, and by
maintaining existing differentials, the Chancellor has removed the
uncertainty on fuel tax but he has done little to improve the relative
tax position of cleaner fuels. |
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