This Is Guernsey

By Nick Mann

DUTY rises on petrol, cigarettes and alcohol are set to cost islanders £2.6m. next year. The changes will probably initially be felt most by motorists.

Petrol duty will go up by 2p per litre immediately - the rate will apply to fuel drawn from importers’ storage from today.

With the extra levy to replace motor tax, unleaded which is currently 63p to 65p per litre would from 1 January cost around 80p.

‘There are sound environmental, social and fiscal reasons for increasing the duty on motor spirit,’ said Treasury minister Lyndon Trott in the

Budget.

If the December States meeting approves an ordinance to introduce excise duty on diesel and a lower rate for marine petrol, from January the standard rate on both road fuels will be set at 29p per litre.

The concessionary rate of duty on petrol for marine use will be 15p per litre.

Drinkers are also hit in the pocket by this year’s Budget.

In 2005 and 2006 alcohol duty increased by 10% and, for fiscal reasons, as part of the 2007 Budget the rate was increased by 20%.

Treasury is proposing another 20% rise this year, which also takes into account the aims of the Bailiwick Alcohol Strategy.

Duty on a pint of beer will rise by 5p, on a 750ml bottle of wine by 21p and a litre of spirits by £1.33.

‘These proposals should, taking into account a small anticipated fall in import levels due to a reduction in consumption and an increase in duty-free imports, raise approximately an additional £1.5m. per annum.’

After consulting Health and Social Services and the Home departments, Treasury is recommending an increase in duty on cigarettes of 7.7%.

This is RPI plus 3%, which is in line with a States direction from 2002.

Cigars, hand-rolling tobacco, and other manufactured tobacco or tobacco leaf escape this because it would result in a level of duty that was higher than the UK or Jersey.

‘There is strong worldwide evidence that tobacco is price-sensitive, i.e a 10% rise in overall price will generally result in around a 5% drop in consumption. Furthermore, the continuing real-terms increases in the duty on tobacco are a powerful motivator for smokers to quit and to deter young people from starting.’

Treasury estimates the proposal for tobacco will raise an additional £300,000.

‘Although it appears that less tobacco is being consumed, the decrease in import volume also indicates that there is an increasing amount of tobacco products that are being consumed in the island on which no duty has been paid,’ it said.

That situation will be monitored and necessary steps taken to protect States revenues.

* The increased rates of tobacco and alcohol duty will be applied with immediate effect as the goods are taken out of bond.