Motorists suffer again as new year petrol duty and VAT rises bite

Less than two weeks after reports of petrol prices reaching record highs, motorists once again face the prospect of handing over more money to the Treasury thanks to new increases in petrol duty and VAT.

A rise in petrol duty came into force on New Year's Day to put another 0.76p on a litre of petrol and diesel while on 4 January the VAT rise of 2.5% to 20% will mean another hike for long-suffering drivers who have seen a litre of unleaded rise from an average of 107p in January 2010 to 124p today.
The AA believes that the combined rises will add an extra 3.5p on a litre of both unleaded and diesel and estimates that motorists were spending nearly £10 million a day more on fuel than they were a year ago.

Meanwhile, the RAC warned that the Government was in danger of pushing motorists too far.

"Given that each penny increase in fuel duty raises about an extra £500 million for the Exchequer, it is easy to see why the chancellor is tempted to hike rates," the foundation's director, Professor Stephen Glaister told the BBC.

"But if the nation's 34 million motorists are pushed too far they will drive less and the Treasury could actually see their tax take fall.

"At the election there was much talk about a fuel duty stabiliser. Drivers will rightly be wondering what happened to that idea."

Find out what the VAT rise will mean for you here.

What do you think of the latest increases? Are they fair as the Government tackles the deficit or are motorists being hammered again? Give your comments below.
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