§ I now come to excise duties. First, I propose to raise the duties on alcoholic drinks to maintain their real value. That means that the duties will rise from 6 o'clock tonight by 9.3 per cent.—in line with the increase in the retail prices index in the year to December 1990. That will put about 2p on a pint of beer, 9p on a bottle of wine and around 56p on a bottle of spirits.
§ I will also be legislating to change the basis on which beer is taxed. The existing system of taxing the so-called "worts" was introduced by my predecessor, Mr. Gladstone. It will now be replaced by one in which the end product, the beer itself, is taxed. The new system will relate the duty more closely to the alcoholic strength of the beer—with a higher tax levied on strong lagers than on low alcohol beers.
§ I propose increasing all tobacco duties by 15 per cent.—well above the rate of inflation. This will add about 16p to the price of a packet of 20 king size cigarettes, and, I regret to say, around 8p to a packet of small cigars.
§ There are strong health arguments for a big duty increase on tobacco. In recent years, the duty has fallen in real terms, and cigarette consumption, having declined in the early 1980s, has since begun to turn up again. Raising the duty will help to counter this unwelcome trend.
176§ The motor car imposes large costs on others in the form of pollution and congestion. I have decided therefore to increase the duties on petrol and DERV by 15 per cent, giving the private motorist a strong incentive to choose more fuel-efficient vehicles, and ensuring that those who pollute most, pay most. This is fully in line with the policy set out last year in the Government's White Paper on the environment.
§ A litre of leaded petrol will rise by nearly 4p, a litre of unleaded by about 3p and a litre of diesel by just over 3p. The tax differential between leaded and unleaded will increase, giving a further boost to the take-up of unleaded. I propose to freeze vehicle excise duty for private cars and light vehicles at £100, for the sixth year running, and also to freeze VED for all heavy goods vehicles.