THE National Farmer's Union has formed an alliance with transport industry leaders to call for sweeping changes to the fuel taxation system that is blighting Britain's ability to compete on the world market.

The NFU and the Freight Transport Association have joined forces to forge a submission to Chancellor Gordon Brown calling for:

l a reduction in road tax for light goods vehicles and cars based on environmental criteria

l a system that would see foreign HGVs having to contribute to the upkeep of Britain's roads.

Calling for the Chancellor to commit to a thorough review of the way in which road users are taxed and charged, NFU deputy president Tim Bennett said the document offered a considered and constructive response to unacceptable hikes in fuel prices.

He said: "The competitive position of UK agriculture and UK transport operators is being seriously compromised by diesel duty at two-and-a-half times the EU average.

"The Chancellor cannot continue to rely on the blunt instrument of fuel and road tax as the only means of controlling the growth of traffic on our roads.

"Mr Brown must now answer the growing calls for a more sophisticated and targeted taxation system that can truly deliver for the economy and the environment."

Mr Bennett added: "There must be a review of the present assumption that road fuel duties and Vehicle Excise Duty will be indexed to inflation.

"The system needs to change if Britain's farming and transport industries are to compete fairly with their competitors abroad."