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Petrol retailers support fuel tax cuts

15 February 2008

The price of fuel is an emotive subject, especially for hauliers struggling to stay in business in a very competitive market. And the Freight Transport Association and Road Haulage Association have long campaigned to have the duty cut to bring the UK in line with the rest of Europe. Their meeting last week with Chancellor Alistair Darling (Darling  keeps silent over fuel duty rise) to ask him to abandon the 2p/lit rise due in April was evidence of the approach they have taken to get the message across.

The two associations have also joined forces with other industry organisations such as the British Association of Removers, the AA, the RAC and the Federation of Small Businesses to put pressure on the government to cut fuel duty for commercial vehicles, even if that means uncoupling the tax charged to CVs with that charged for private car use. But the disparity between the duty paid in the UK and on the continent has not gone unnoticed in other quarters.

Last week The  Daily Telegraph reported that a driver buying 1,000 litres of diesel in a Belgian forecourt would pay £695.30, while his British counterpart buying the same amount of fuel in the UK has to pay £921.66. Fuel duty in Belgium is only 24.7p a litre, compared with 50.35p in Britain. Additionally, the paper pointed out, one in seven of the heaviest lorries on Britain's roads comes from overseas. And the haulage industry's call for a cut in fuel duty has now received support from an unlikely source - the RMI Petrol Retailers Association (PRA).

PRA director Ray Holloway says: "With the price of fuel now clearly impacting on inflation, the time has come for the Chancellor to cancel the fuel duty increase scheduled for 1 April." January's Consumer Prices Index (CPI) inflation figure rose to 2.2 per cent, up from 2.1 per cent in December 2007. The rate is the highest since June 2007. The largest upward pressure came from the price of fuel.

Holloway adds: "This outcome was inevitable and has formed the basis of all messages fed into the Chancellor by the PRA for some time. With the impact of rising duty now clearly affecting inflation, going ahead with the fuel duty rise on 1 April would be unwise, especially at a time when summer demand for fuels will be starting to push prices upwards.

"Increasing fuel tax would mean further price increases. The Chancellor must recognise the effect that a duty rise would have and cancel it as soon as possible, as well as reviewing how and when small businesses pay Excise Duty on fuel supplies." Of course operators will have to wait until 12 March to see whether the Chancellor is convinced by any of the arguments and drops the 2p/lit increase in duty or whether he will admit that current fuel prices are causing a lot of harm to British business and let common sense prevail.


Roanna Avison
Email at roanna.avison@rbi.co.uk
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