§ We propose, therefore, to add 9d. a gallon to the Customs Duty on petrol and other light oils and on heavy oils used as road fuel. This increase will apply from 6 o'clock today. [Laughter.] I am afraid there is hardly time for hon. Members to get to a pump. As a result of this the price of petrol will be increased to 3s. a gallon and, as I have said, this should lead to some resultant economies in consumption.
§ We propose, therefore, to continue throughout the next 12 months the extra ration of 90 miles a month already promised to ordinary car users for the three summer months. This will mean that as from 1st June, the beginning of the next standard rationing period, the standard ration will be increased from the rate of 90 miles to 180 miles a month. The increased ration for the six months June—November will be made available to motorists from 8th May. So far as passenger transport is concerned, the overall cost will go up as a result of this increase of the tax by 4 per cent. in the country and by 5 per cent. in London. This small increase in costs should not lead to many additional applications for increases in fares.
§ There is one class of user of hydrocarbon oils where the circumstances are such that I feel justified in proposing a measure which will go far to offset the effect of the increase of duty. Certain 76 agricultural operations are performed in some cases by vehicles or machines using fuel which is taxed and in other cases by vehicles or machines using an untaxed fuel. The additional duty now to be paid in respect of the former would involve a considerable extra cost to the farmer and an undue discrimination between the two types unless suitable measures were taken to offset the extra cost of running such vehicles or machines.
§ I propose therefore that an annual grant should be paid in respect of each such vehicle or machine based on a reasonable assumption as to the average amount of taxed fuel which each type consumes. Legislation will be necessary to authorise these grants, but it cannot be included in the Finance Bill. Before the necessary Resolution is tabled, my right hon. Friend the Minister of Agriculture will consult the representatives of the farmers and manufacturers on the details. I provisionally put the cost of this concession at between £21 million and £3 million a year. The expenditure on these new grants will of course form the subject of a Supplementary Estimate in due course.
§ The producers of indigenous oils which are at present free of duty, thereby receive a preference of 9d. a gallon. After consultation with my right hon. Friend the Minister of Fuel and Power, I propose to continue this margin unchanged. From tomorrow therefore these indigenous oils, together with petrol substitutes, will be subject to an Excise duty of 9d. a gallon, that is to say 9d. a gallon less than the new rate of. Customs duty. The existing duty on power alcohol will be raised by the same amount.
§ The provision in the Finance Act, 1938, under which the present margin has, in part at least, been guaranteed for the past 12 years, expires next July. I do not think that it would be right to ask the House to undertake, by legislation, that this margin should remain unchanged for a further period of years. But there would, of course, be no question of modifying it, without very careful consideration of the circumstances prevailing at the time and then only after giving the interests concerned an opportunity to put forward their case. The extra yield of the increased petrol tax is estimated at f68i million for this year and £73 million for a full year.
77§ Let me now summarise these various changes that I have proposed so that we can see where we are so far as our necessary surplus is concerned. We start, of course, with the out-turn that we should expect to get if taxation were continued as at present. Those figures which I gave earlier were: above the line surplus £441 million, overall deficit £9 million. Since then we have added receipts for petrol tax £68i million, and for Purchase Tax on commercial vehicles £9 million, that is a total of £77.1 million. We have deducted for strengthening beer £2 million, for Purchase Tax on higher-priced cars £1 million, making a net increase of £74 million, which would yield a surplus above the line of £515 million and overall a surplus of £65 million.
§ In the circumstances which I have already explained to the Committee I believe that that is a rather larger surplus than we need budget for this year, and so I have looked round to see what modest adjustment in taxation could best be used to take up the slack. Whatever remissions we can manage must, and I hope we shall all agree on this, give proportionately more relief to those at the lower end of the income scale.