The AA has urged the government to avoid hitting the motorist in the upcoming budget.
AA president Edmund King has written to the Chancellor of the Exchequer saying he was concerned that there may be Insurance Premium Tax (IPT) and car fuel duty hikes to be a ‘quick win’ to increase revenues.
He pointed out that the cost imposed by the 58% increase in IPT which came into effect in November 2015, added up to £18 to the average quoted premium for a car insurance policy.
“It contributed to the biggest quarterly leap in in the typical quote for car cover since 2010 (10.4%), coming as it did at a time when car insurance premiums had started to rise thanks to growing claims costs associated with fraud and whiplash injury,” he said.
An AA-Populus poll in July 2015, found that only 11% of almost 30,000 respondents thought the increase was justified while 87% considered an increase in IPT would encourage more uninsured driving.
King pointed out: “Any additional increase in IPT would simply discourage motorists from taking out any roadside assistance cover, exposing them to potentially crippling costs for emergency recovery in the event of a breakdown. The IPT hike from the last budget is a double-whammy that only affects drivers as it hits insurance and roadside assistance costs, particularly hurting those on low incomes; and young drivers, who pay the highest premiums.”
King also wrote that although the cost of fuel had fallen over recent months, it remained a significant part of a driver’s weekly spend.
“The country is emerging from recession and there is greater confidence among British families. Not only do hard working families rely on low fuel costs for their day-to-day driving but industry is also dependent on motor fuel for deliveries and mobility of their workers.” he added.