Higher taxes on alcohol and 'dirty' cars expected from Darling's first Budget

12 March 2008 / by Rachel Mason
The Chancellor is expected to announce above inflation rises on alcohol and a 'showroom tax' of up to £2,000 on the most polluting cars in his first Budget, which is due to start at 12.30pm today.

Alistair Darling is also likely to replace air passenger duty with a tax on flights instead in a bid to cut CO2 emissions, but reports suggest that his planned 2p rise in fuel duty will be delayed. The rise was announced by Gordon Brown's last Budget in 2007, and was supposed to come into affect on April 1 this year, but has been put back six months in what is likely to be an attempt to avoid angering motorists who are already struggling with rising oil prices

It is also thought that in an effort to cut down on plastic manufacture, use and waste, supermarkets will be required to charge customers for disposable plastic bags if they do not scrap them voluntarily, and in a bid to curb binge drinking, taxes on alcohol – particularly on alco-pops and super strength ciders – are expected to rise significantly.

As it looks as though the Government's target to cut child poverty by half by 2010 is not going to be hit, Darling is also expected to plough more money onto tackling the problem.

And with rising energy costs, it is also thought that the Chancellor will announce more help for poorer families struggling with their gas and electricity bills by limiting the tariffs paid on pre-paid meters.

But the point that Darling's rivals – Shadow Chancellor George Osborne and the Lib Dems economic spokesman, Vince Cable – are focusing on is Labour's tax on the 'middle classes'.

According to a report released today by the Organization for Economic Cooperation and Development, middle-class families are paying an extra £1,250 a year following the sharpest rise on their tax bill in the Western world over the past five years.

The report also revealed that married couples are worse of than single people, paying £1,777 more than five years ago, compared to single people who have seen a £661 rise in their tax bill.

And the Chancellor is today expected to raise the burden further still – measures announced last year by the Prime Minster when he was Chancellor, which will see tax go up for 5.3million of the country's poorest households, are set to be confirmed today.

Talking to the Telegraph, Osborne said: "Here is the proof that while the rest of the world is successfully educing the burden on families, Alistair Darling and Gordon Brown are doing the exact opposite."

Melanie Mitchley, Director of Industry Relations at Callcredit urges people to prepare for the changes the Budget is likely to bring, good and bad.

"As Darling announces his first Budget and consumers digest what emerges from the red brief case, it is essential that they take into account the slump in disposable incomes and increasing levels of debt when considering future spending.

"The latest figures from Philip Hammond, shadow Treasury chief secretary, reveal that the disposable income of the average working family has dropped from £26,200 in 2006 to £25,900 today, whilst UK personal debt is growing and stood at £1,412bn at the end of January.

"In the current financial climate consumers may feel like they are being squeezed from all sides with growing mortgage repayments and increased taxes on alcohol and motoring”.

But, says Mitchley, although it may all sound like doom and gloom, the announcement of the new Budget is the "ideal time" to tackle money issues head on and make a fresh financial start.

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