The Budget will also contain measures designed to further encourage companies to introduce alternative fuelled vehicles to their fleets and more fuel efficient vehicles, perhaps through a graduated vehicle excise duty system. Finally the Government may also try to resolve what it says is a discrepancy which sees no benefit-in-kind tax paid on company-provided car parking space, but benefit-in-kind paid on a company-provided public transport season ticket.

However, the Government will not tax the company car out of existence, according to Transport Minister Gavin Strang. He said: 'The company car provides tremendous flexibility. There is no question of us taking a dogmatic approach. It is a pragmatic approach.'

But, without doubt, the Government's number one aim is to abolish the 2,500 and 18,000 business miles tax breaks, which the previous Conservative Government declared were sacred in the run-up to the 1994 reform of company car taxation.

'There is serious criticism of the current company car tax arrangements because they provide incentives to drive more miles. At the recent Labour Party Conference I met a senior company executive who had driven from Glasgow to Brighton and was then driving on to London simply to clock up business miles. That mentality has to change,' said Strang.