Fuel duty increase proposals attacked as ‘draconian’ – Rishi Sunak urged not to raise tax
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Fuel duty rises would hit the “poor hardest” at a time of economic instability as drivers continue to recover from the coronavirus pandemic. Experts at Fair Fuel UK have been warned by Treasury sources that drivers could be hit in the next budget with a possible fuel duty rise of between two and three pence.
However, a new report from the Centre of Economics and Business Research (CEBR) has found that any rise in fuel duty would generate little revenue for the government.
Instead, they warn that a rise in duty would create economic damage across the UK and reduce employment by around 8,000 jobs.
The report has highlighted that some drivers would be hit harder than others with the poorest ten percent spending more on fuel than any other demographic.
Conservative MP Craig Mackinlay, Chair of the All-Party Parliamentary Group for Fair Fuel has campaigned heavily against the proposals after warning the move would “not be supported” by constituents.
He said: “Fuel duty rises are bad for the economy, bad for inflation, bad for business and bad for jobs. Nor are they supported by our constituents.
“The CEBR showed motorists in the poorest ten percent of the UK population already spend proportionately twice as much of their disposable income on fuel as wealthier groups, so increasing fuel duty will have a disproportionate tax impact.
“I respectfully must reject the green lobby’s calls and continue the successful and popular freeze on fuel duty.”
Fair Fuel UK says the move is being considered as part of plans to pay back the significant coronavirus debt.
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The Treasury also has a £40billion budget black hole to fill which has created by the switch to electric cars.
As more electric models are purchased it is expected that the amount of fuel duty collected from petrol stations will likely fall.
Alongside this, vehicle emissions car tax charges will also drop and will need to be replaced by a new system.
The CEBR even warns that by 2040, fuel duty receipts will be less than a fifth of current levels.
However, they claim that the coronavirus debt crisis was long term and will need up to 50 years of revenue-raising to solve.
Higher fuel duties would therefore only be a temporary solution despite causing political and economic damage.
Douglas McWilliams, CEBR Deputy chair and author of the report said: “The freeze on fuel duty is gradually bringing the UK rate of tax into line with the rest of Europe.
“It has reduced the CPI (Consumer Price Index) by 6.7 percent and raised household real incomes, especially those of poorest households, by £24bn.
“Why abandon it when taxing fuel hits the poor hardest, with the North suffering most and London least?”
A recent survey by the RAC found that the only way drivers would tolerate an increase in fuel duty was if any extra money was ringfenced for road improvements.
Under these circumstances, a simple 2p per litre rise would be accepted by many but nothing higher.
However, some MPs have even called for increases of up to 5p a litre which would massively affect road users.
Howard Cox, founder of Fair Fuel UK said drivers need “money in their pockets” to help support the economy as he attacked “draconian” increases.
“The highest-taxed drivers in the world do not need a virtue-signalling fuel duty hike to appease a very small green minority.
“They, like all consumers, along with small businesses need more money in their pockets to spend so the Covid wrecked economy recovers through incentivisation not draconian fiscal punishment.”
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