Motoring organisations have warned the government not to raise fuel duty in today’s Budget.
Ahead of the Budget today, associations representing motorists and freight transport have called on the Chancellor to freeze or lower the tax on fuel, warning about the cost of extra duty on both the individual and the UK economy.
The Freight Transport Association (FTA) said falling fuel prices had been a major factor in the country's recovery but high taxes meant transport operators haven't benefited, with only a 13% cut in prices at the pump despite a 43% drop in world oil prices.
FTA chief executive David Wells last week wrote to George Osborne urging him not to renege on previous promises to hold current levels until September. And he stressed that any rise would force businesses to cut back on investment, training, efficiency improvements and modernisation.
He said: "Cash flow pressures will cause many businesses to implement cuts if the Chancellor raises fuel duty, and that would be detrimental not only to the businesses themselves but also to the economic growth of the country as a whole."
Pointing to its survey that said 73% of members feared a post-election rise in motoring taxes, the AA echoed the FTA’s call for the Chancellor to keep to his September promise.
The AA is concerned that urban emissions scare-mongering will be used as an excuse for raising fuel and car ownership tax.
The motoring organisation also pointed out that despite the freeze, in reality, for the past three months, the Treasury has been getting at least an extra 0.5p a litre in VAT from non-business diesel drivers. Although the wholesale price of diesel has been the same or as much as 3p a litre lower than the cost of petrol, fuel retailers have been charging up to 6p a litre more for diesel at the pump – 20% of which is VAT.
AA president Edmund King said: “The AA does not want a U-turn on the promised continued fuel duty freeze for September and reminds government that, if it is planning future rises, it is a tax related more to mileage than means. Owners of high performance cars pay extra for the vehicle’s higher fuel consumption but it also stunts the income of less well-off drivers for whom mileage may be the difference between having and not having a job.
“For that reason, fuel duty should remain frozen and other motoring avenues, that generate tax but also stimulate development, should be tried. A scrappage scheme could pay for itself through VAT and could serve the dual function of raising tax and meeting national emissions targets.”