CE11
9 March 1999
CHANCELLOR HONOURS COMMITMENT ON
FUEL DUTIES TO PROTECT THE ENVIRONMENT
The Government continues to deliver on its promises to protect the
environment, with a tax policy firmly focused on reducing emissions
of greenhouse gases and improving local air quality - an area where
the UK has taken an international lead.
From 6pm tonight the tax (duty plus VAT) on petrol and diesel will
increase in line with the Government's commitment to raise road fuel
duty rates by an annual average of at least 6 per cent a year above
inflation.
- The tax on leaded and unleaded petrol will go up by 4.25p and
3.79p a litre respectively.
- Ordinary diesel will go up by 6.14p a litre reflecting the higher
carbon content, but ultra low sulphur diesel (ULSD) will go up
only by 4.96p increasing the differential with conventional
diesel, reflecting the lower emissions of particulates that it
produces. This is a further incentive to encourage all users of
diesel to switch to this significantly cleaner fuel.
- The duty on higher octane unleaded petrol will go up by 3.57p a
litre. However, from 1 October 1999, the duty will be reduced to
2p above the rate for unleaded petrol, reflecting the use of this
grade as the basis for Lead Replacement Petrol.
- The duty on road fuel gases, which offer environmental benefits
over petrol and diesel is cut to 15 p per kilogram.
DETAILS
The Chancellor is continuing his policy of changing the structure of
taxes on road fuels over time to improve the quality of air in urban
areas.
1 January 2000 will see a virtual ban on leaded petrol as new EU wide
fuel quality standards come into operation. But, as half a per cent
of total petrol sales will still be allowed for classic cars etc. the
leaded rate of duty will be kept.
The duty rates are as follows;
New rate
(pence)
Leaded petrol per litre 52.88
per gallon 240.40
Unleaded petrol per litre 47.21
per gallon 214.62
Higher Octane Unleaded Petrol per litre 52.33
per gallon 237.90
Ordinary diesel per litre 50.21
per gallon 228.26
Ultra Low Sulphur Diesel per litre 47.21
per gallon 214.62
Gas oil per litre 3.03
per gallon 13.77
Fuel oil per litre 2.65
per gallon 12.05
AVGAS per litre 26.44
per gallon 120.20
Road fuel gas per kg. 15.0
NOTES FOR EDITORS
1. The continuing commitment to a 6 per cent increase for road fuels
is part of the Government's policy to reduce emissions of greenhouse
gases and recognises the environmental and other costs attached to
road use. The escalator, if maintained at the present level, will
save between 2 and 5 million tonnes of carbon annually by 2010.
2. Ordinary diesel has a greater energy and carbon content relative
to petrol. The higher duty increase for diesel is partially to offset
this advantage and also reflects the fact that using diesel is worse
than petrol for urban air quality. Burning diesel produces more
particulates (small particles of black smoke and other pollutants)
and nitrous oxide emissions than petrol.
3. The duty rate on 97 octane super unleaded petrol has been increased
by 3.57p a litre. However, the duty rate will be cut to 2p above the
rate of unleaded petrol because, from 1 January 2000, this grade of
fuel will no longer contain benzene, a known carcinogen. But the
fuel will be used in older, more polluting cars and it would not be
right to cut the rate to the same as unleaded. The duty cut will take
effect from 1 October 1999 to facilitate the introduction of Lead
Replacement Petrol (LRP). The ban on leaded petrol will mean that LRP
will become available for those cars that need the octane or valve
seat protection of leaded petrol. LRP will be treated as higher
octane (super) unleaded petrol for duty purposes.
4. We have agreed with our EU partners fuel standards for petrol and
diesel that must be met by the year 2000: this includes a virtual ban
on leaded petrol. Sulphur levels in ordinary petrol have been cut
back. Tighter fuel standards have also been set for 2005. ULSD
standards are even stricter than those agreed for 2005.
5. The preferential duty rate for ULSD was introduced on 15 August
1997 at 1p less per litre than ordinary diesel. This was increased to
2p in the last Budget and has now been increased to 3p. ULSD produces
lower levels of particulates than ordinary diesel and the Government
is pleased that this policy has resulted in the rapidly increasing UK
production of this quality of diesel. ULSD consumption was running at
43 per cent by February 1999, and is expected to reach 100 per cent
by the end of 1999.
6. The duty rates for gas oil (red diesel) and fuel oil will increase
by at least 6 per cent in real terms in this Budget and over the next
two years. There will be a larger percentage increase on fuel oil to
bring the rate closer to that on gas oil. There is no justification
on environmental or health grounds for the differential in duty rates
between these fuels and it is intended to equalise the rates by 2001.
7. In further recognition of the environmental merits of gas as a
road fuel, the duty rate has been cut by 29 per cent to provide more
incentive to convert to this fuel.
8. The combined revenue effect of these measures on an indexed basis
is +#45m in 1999/2000, +#115m in 2000/2001 and +#130m in 20001/2002.
The impact of these changes on RPI is estimated to be 0.24 per cent.
9. Details for businesses are published in Budget Notice 6/99, which
is available from Customs & Excise Business Advice Centres and from
the Customs & Excise Internet site.
Press enquiries only to HM Customs and Excise, Public Relations
Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ.
Telephone: 0171 865 5471/5472
Others should contact their local Excise and Inland Customs Business
Advice Centre, listed under Customs and Excise in the telephone book.
Customs and Excise Internet address:
http://www.hmce.gov.uk
This news release can also be found at :
http://www.hm-treasury.gov.uk.
Other Treasury material can also be found at this address.
# = pounds sterling