However, Association of Car Fleet Operators director Stewart Whyte said the Chancellor's encouragement for gas-powered vehicles, ultra-low sulphur diesel and vehicle excise duty incentives for lorries which meet tough new environmental criteria would encourage more fleets to look at the fuel efficiency of their operations.
In addition, the Chancellor's decision to cut 1p off the basic rate of tax from April 6 next year will result in a basic rate taxpayer driving a £14,500 company car saving £50.75 on benefit-in-kind tax before deductions for clocking up more than 2,500 business miles.
A fleet operating 100 petrol-engined vehicles averaging 32.1mpg assuming 18,000 business miles per vehicle will see its fuel bill rise by £7,854p a year, while a company operating 100 diesel-engined vehicles averaging 38.84mpg will see its fuel bill rise by £6,482 a year.
However, in what the Chancellor called 'an air quality package' to speed up the reduction of urban particulates, he also announced he would reduce duty on low-sulphur diesel as soon as possible after May 1997 and a 25% reduction in duty on road fuel gas.
The Chancellor surprised many people by raising the two-year-old Insurance Premium Tax from 2% to 4% and that will add typically £8 a year to car insurance policies and an average £2-£3 to typical car breakdown packages, according to preliminary RAC calculations.
Meanwhile, the Chancellor's decision to clamp down on both tax and VAT evasion - likely to affect various company car finance lease schemes - was expected. However, he balanced his expected decision to limit VAT repayments to companies to three years by announcing that Customs & Excise would only be allowed to recover VAT going back three years.
The Chancellor also increased vehicle excise duty on cars by £5 to £145 and underlined his commitment, announced in last year's Budget (Fleet News December 1, 1995), to reduce Employer's Class 1A National Insurance from 10.2% to 10% from April 6, 1997.