10.03.08 The Chancellor must scrap the 2p fuel duty rise
Would a 2p increase in fuel duty make you vote the government out at the next election?
On Wednesday the Chancellor Alistair Darling will unveil the 2008 budget, and with it, a series of tax hikes on motoring. The government is still planning to press ahead with a 2p increase in fuel duty, to take effect from April 1st 2008, despite increasing fears over the state of the economy and new record oil prices being set each week. Oil prices reached a record $107.44 on Monday morning.
Figures from PetrolPrices.com show that the price of unleaded has shot up 18.1p per litre in the last year. At the beginning of March 2007 a litre of unleaded cost 88p. Both unleaded and diesel are at record highs - unleaded is now 106.1p per litre and diesel is 112.5p.
Despite the impact record prices are having on motorists, on the haulage industry and on inflation, it's likely believe that the Chancellor will push through the price rise anyway. Many believe he is scared of being labelled as a hypocrite – this year's budget has been billed as the 'Green Budget', and cutting fuel duty would not be in line with the overall message the government wants to convey.
Other methods of taxing motorists are expected to be announced too, for example taxing gas guzzling cars out of existence, by adding a 'showroom' tax of £2000 to the most heavily polluting cars, and colour coding tax disks by carbon emissions. This would make it easier for local councils to identify and penalise high polluters, possibly by charging 4x4 owners more for parking.
But why does the Chancellor need this extra revenue? Rising fuel prices caused by oil price rises have been bad for motorists, but good for the government. Compared to the Pre-Budget Report in October, figures suggest that the Treasury has received an extra £1.2 billion in revenue because of the tax on North Sea oil. This means Mr Darling could easily afford to scrap the 2p increase, which estimates suggest would cost £1 billion.
If the Chancellor doesn't scrap the increase, and the conditions in the economy and the oil market continue, pump prices will hit £1.50 a litre this year - the equivalent to well over £6 a gallon. This would have a catastrophic effect on motorists, the haulage industry, and therefore inflation and the country as a whole.
Motorists across the UK are now having to adjust their driving habits because of the price rises - many now take fewer non-essential trips, have switched to smaller or more efficient cars or drive slower to get the most out of their tank. Green lobbyists see these changes as evidence that hitting motorists financially is the only way to curb carbon emissions, but it's possible that going ahead with the 2p fuel duty rise and continuing to target motorists could cost Labour much more than a few pennies at the next election.
Should the 2p rise be scrapped? Have you changed your driving habits as a result of fuel prices? Are green taxes stealth tax or will they help us cut our carbon emissions?
Your Comments
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Please scrap the duty, you are hitting the working class the most. How come petrol is so cheap in Spain? Our government are being too greedy.!!!
i think it is stupid to raise tax on petrol unless the government intend on getting rid of road tax. If there was no road tax and the petrol was more expensive people who only use their car once a week wouldnt pay as much tax as the people who do tens of thousands of miles a year. Which in my opinion is fairer on the little old lady who only does 5 miles a week but still has to pay £100 road tax like everyone else.
Who cares about the high prices in petrol or diesel?
We do you idiots at Westminster, have the next election and lets see what the people think. Or are you scared of being out of a job!