Healey draws up plans for 'green tax' on imported fuel amid fears it will bump up prices even more

John Healey is plotting a tax hike on imported fuel in Wednesday's Budget, sparking fears he could trigger a rise in petrol prices.

The Chancellor will use the 'green tax' to address environmental levies which hit British refineries but not imported fuel.

But he has been accused of a 'shameless tax raid' as critics said consumers would pay for the policy at the pump.

At present British fuel companies pay millions in net-zero fees that overseas competitors do not, giving foreign producers an advantage.

The proposed tax, a 'carbon border adjustment mechanism' (CBAM), would 'level the playing field' by hitting imported fuel with some or all of the environmental taxes British firms currently pay, The Sunday Telegraph reported.

But the TaxPayers' Alliance said the charges would be 'a shameless tax raid disguised as environmental policy'.

John O'Connell, the group's chief executive, said: 'Levying carbon charges on imported fuel is little more than a tariff that will inflate pump prices and drive up supply chain costs for ordinary families.

'Burnham must rule out introducing new punitive green taxes in the Budget.'

The Energy Secretary Miatta Fahnbulleh is thought to be a supporter of the policy and is understood to have made the case to Mr Healey.

And the paymaster general James Murray told Parliament on Friday that the Government was 'considering the feasibility and impacts' of using CBAM on refined products, the strongest signal yet that the measure could be included in the Budget.

Mr Healey is under pressure to ditch Labour's planned Fuel Duty hike after research revealed motorists have already shelled out an extra £10billion at the pumps because of sky-high prices sparked by the Iran war.

Petrol car drivers forked out an extra £3billion while diesel drivers have been hit to the tune of £7billion.

Meanwhile Mr Healey has raked in a windfall of almost £1.7billion as a result of the increased VAT receipts on fuel transactions.

Under current plans Fuel Duty is to rise by 3p per litre on January 1, with another 2p rise on March 1.

Oil prices reached a five-month high last week amid the ongoing Iran war and disruption in the Strait of Hormuz.

The Government approved plans last week for production at the Jackdaw gas field in the North Sea following months of delays in its latest policy to combat the cost-of-living crisis.

And it was reported yesterday that Andy Burnham would defy Ed Miliband to approve the Rosebank oil field, opening up a potential 500million barrels of oil.

Mr Miliband previously referred to the proposals as 'climate vandalism'.

But Mr Burnham and his Chancellor are reportedly prepared to yield to economic constraints which left them struggling to put together a package of support for low-income families and suffering businesses against a backdrop of high borrowing costs and shrinking fiscal headroom.

A Treasury spokesman refused to comment on 'speculation' ahead of the Budget.