Shock rise in road tax

Motorists who buy gas-guzzling cars will face a shock increase in road tax to £1,000 in Wednesday's Budget to force high polluting cars off the road.

Chancellor Alistair Darling will reward people who buy "green" cars with low carbon emissions, but road tax will go up for anyone driving a 4x4, sports car or family car if their vehicles are highly polluting.

Vehicle excise duty will rise to around £1,000 in the first year for vehicles in the top band of worst polluters.

It will then fall in the second and subsequent years to around £300.

Mr Darling is expected to change the bands so that more cars with low carbon emissions will attract low or even zero road tax, while the worst offenders are hit harder. The Chancellor will justify the changes by pointing a target of reducing UK carbon emissions by 60 per cent by 2050 to combat global warming.

He is further expected to anger drivers by pushing through a 2p increase in fuel duty announced last year despite the current record prices for petrol and diesel.

The rising cost of oil and the expected Budget increase in tax will mean drivers will soon be paying £5 a gallon for their fuel.

Wednesday's Budget is also likely to see above-inflation increases in tax on cigarettes and alcohol.

Most alcohol duties have been held at or below the general rise in prices in recent years, but Mr Darling is expected to go for bigger increases this year in an attempt to curb binge drinking.

Shadow chancellor George Osborne said Mr Darling should make sure tax increases on problem drinks were offset with a reduction on low-alcohol drinks.