In my last Budget, I announced that road fuel duties would increase on average by at least 5 per cent. in real terms in future Budgets. This year, I intend to stick to that commitment. It is an essential part of the plans that I set out last year to deliver healthy public finances as quickly as possible and it forms an important part of the Government's strategy to return carbon dioxide emissions to their 1990 level in the year 2000. From 6 pm tonight petrol taxes will therefore go up by 2½P a litre for both leaded and unleaded petrol, taking into account the effect of VAT.
In recent years there has been a small differential between the duty on diesel and the duty on unleaded petrol. The differential is becoming difficult to justify in economic, health or environmental terms. I therefore propose to tax diesel at the same rate as unleaded petrol. This means an increase of about 3p a litre on diesel.
I also propose to increase the duty on gas oil and fuel oil by ½p a litre, which will raise £70 million a year. I propose, however, to freeze the duty on road fuel gases.