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'Green' discount on LPG tax to end

Controversial Government plans to end heavy discounts on green fuels have sent shockwaves through the UK motor industry.

Chancellor Gordon Brown said in his pre-Budget report that he will phase out the tax breaks on liquefied petroleum gas that make it about half the price of petrol because the environmental benefits no longer justified the discount.

Brown says: “We will gradually increase the duty rate for LPG over the next three years, setting duty differentials on a path towards a level commensurate with the fuel's environmental benefits. Future differentials for the next three years will be announced in Budget 2004.” Both Ford and Vauxhall, which make ranges of alternatively-powered cars, say they are disappointed by the news.

And the RAC Foundation says motorists who have been encouraged to buy more expensive LPG vehicles have been let down. The RAC has been involved in discussions with the Treasury prior to the pre-budget report and was disappointed that these have come to nothing. “We told them that to give consistency to the debate you have to give commitments for at least five years. If you change the duty every year you just create total confusion,” says Edmund King, RAC director.

There was good news for private enterprise with the announcement that the Government plans to abolish or reform regulations governing small businesses. “The retail motor sector includes a vast number of small businesses who provide a fantastic service for the consumer under what have been rather stringent Government regulations,” says Matthew Carrington, chief executive of the RMI.

“By cutting regulations, costs could be reduced. It would also allow businesses to get on with serving their customers.”

Also in in the pre-Budget report was confirmation of plans to increase the turnover level at which companies require auditing, from £1m to £5.6m. This will make thousands of businesses in the retail motor sector exempt and could also reduce accounting bills for smaller companies.

The Government also stated that it will analyse the impact of recent changes to company car taxation before making a decision about further alterations.

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