Britain to hike levy on most polluting diesel cars

Britain's Finance Secretary Philip Hammond leaves Downing Street on his way to deliver his budget statement to parliament, London, Britain, November 22, 2017. REUTERS/Peter Nicholls

LONDON (Reuters) - Britain will increase the tax paid by those driving new diesel cars that do not meet the latest emissions standards from next year, in the latest blow to the hard-pressed sector.

Sales of diesel cars have fallen 15 percent so far this year in Europe's second-biggest autos market, whilst demand for petrol has increased 3 percent, as buyers shun diesel models fearful of more levies and regulatory crackdowns.

Since the 2015 Volkswagen emissions cheating scandal, a number of major cities including Madrid, Paris and Athens have announced plans particularly focused on cutting diesel emissions including bans, fines and restrictions.

On Wednesday, Britain said it would hike Vehicle Excise Duty (VED) for those registering a new diesel car for the first time from April next year which do not meet more stringent pollution requirements.

"The tax system can play an important role in protecting our environment," Finance Minister Philip Hammond told parliament on Wednesday during his annual budget statement.

"We owe it to our children that the air they breathe is clean."

The change will add 20 pounds ($27) to the cost of VED for smaller models which fail to meet more stringent standards whilst those driving some larger vehicles could pay hundreds of pounds more.

The extra cost will not apply to next-generation clean diesels which are certified as meeting emissions limits in real driving conditions, the government said.

Hammond said the money would fund a 220-million pound Clean Air Fund to support local plans to improve air quality.

(Reporting by Costas Pitas; editing by Stephen Addison)