The price of fuel will rise by three cents per litre from today while the government next year intends imposing an obligation for motorists to use a proportion of renewable fuel when refilling their car.

The excise tax on fuel was last increased in the 2009 Budget when it had gone up by 4c1 per litre for petrol and 2c4 per litre for diesel.

Mr Fenech also announced that measures would be taken to encourage the use of biological fuel from recovered and recycled material, although he did not delve into details.

Smoking and drinking will be taxed in the hope of encouraging people to lead healthier lifestyles.

The tax on local beer will increase by less than one cent on a 25cl bottle, while that on spirits will go up by 13 per cent.

The excise tax on cigarettes and other tobacco products will increase by three and four per cent respectively.

All the revenue generated through this measure would be directed towards the health sector, Mr Fenech said.

Last year, the excise duty on cigarettes had gone up by 15c for a packet. The excise duty on other tobacco products had also been increased.

During the 2009 Budget, the excise duty on alcohol was reduced to counteract the rising number of people who bought spirits from abroad, mainly from Sicily, where excise duty was lower. However, the excise duty on alcopops, sugary alcoholic pre-mixed drinks, had been increased.

For the first time, the government is introducing a tax of €9 for every tonne of cement to continue pushing the polluter-pays principle. No more details were given on this new tax but it was mentioned in the context of improving the environment.

This measure is expected to deal a further blow to the construction industry following the drastic increases in the cost of filing applications with the Malta Environment and Planning Authority.