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Excise Duty (Petrol)

Volume 175: debated on Thursday 5 July 1990

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To ask the Chansellor of the Exchequer how much revenue was raised in excise duty on (a) unleaded and (b) leaded petrol (i) in the three months prior to 20 March and (ii) subsequently.

In the three months to mid-March, £417 million worth of duty was collected on unleaded petrol and £1,128 million on leaded petrol. In the two months to mid-May—the latest period for which figures are available —the figures were £347 million for unleaded and £847 million for leaded.

I expect that the Minister is aware that the Society of Motor Manufacturers and Traders estimates that sales of unleaded petrol represent about 34 per cent. of the whole. Does the Department have a target figure for sales of unleaded petrol, and what steps is it taking to achieve it?

Last year we set ourselves a target of 30 per cent., and we have reached that. This year we set ourselves a target of 40 per cent., which we hope to achieve by next March's Budget. We have reached 33 per cent. already, so I have high hopes that we can reach this year's target.

New cars fitted with three-way catalytic converters have to run on unleaded fuel. Will my hon. Friend therefore consider removing the 10 per cent. car tax on such new cars? How much longer must cars have two taxes imposed on them—VAT and the 10 per cent. car tax?

As my hon. Friend knows, catalytic converters will have to be fitted to all new cars by 1 January 1993. For that reason, my hon. Friend's points are not relevant in the context of our European obligations.

Does the Treasury have a mechanism for assessing the impact of fiscal policy on the environment? If so, when will the Minister report to the House the impact of the Budget in that respect? If he will not do that, will he explain why?

I have already described the impact of the Budget in increasing the use of unleaded petrol. With regard to wider environmental considerations, the hon. Gentleman, like the rest of us, will have to wait for the publication of the White Paper from my right hon. Friend the Secretary of State for the Environment which is due in the early autumn.

Do not those figures show that our Government are prepared to make fiscal changes for environmental purposes when there is proper scientific evidence and when the fiscal studies show that that would be constructive? Does not my hon. Friend therefore believe that other fiscal changes might help the environmental cause? Does he believe that a differential road tax might also help and lead to savings for the environment?

Road tax has remained the same for five years. That is designed to encourage people who travel less to pay less. The differential was the subject of an amendment tabled by the Labour party during the Committee stage of the Finance Bill. We turned that down on the basis that if we had that kind of differential there is no reason to believe that people's decisions about the sort of car that they may purchase would depend on a differential which any Government might introduce.