2p duty delay “bowing to pressure”
The government has bowed to mounting public and political pressure to postpone the 2p duty rise, but has not gone far enough according to PetrolPrices.com.
The announcement was made this morning – the day that the opposition planned to debate the issue in the House of Commons.
The 2p duty rise was planned for October, but has been postponed for 6 months in the face of unprecedented oil prices, above-expected inflation and the highest unemployment rates in 15 years.
This is the second time that the Chancellor has delayed a 2p duty rise. Another rise was planned to take effect from April 1 2008, but in the 2008 budget he announced it would be delayed until October.
The move means that fuel duty on all types of road fuel will stay fixed at 50.35p per litre until the 2009 budget. However, this still means the UK has the highest rate of tax in the Group of 7 Nations.
UK fuel tax is currently calculated by adding the product cost and 50.35p duty together, then adding 17.5% VAT on top. This effectively means the government are taxing a tax.
“If the Chancellor is expecting gratitude from motorists he’d better brace himself. All he’s pledged to do is not make the problem worse than it already is. What we need is a cut, and we need it now. Any modicum of credibility the Chancellor may have hoped to gain from delaying the 2p rise has been sucked out because the whole thing has been forced at the 11th hour by the prospect of a Commons debate.”
“Oil is nearing $150 a barrel, inflation is running well above target at 3.8% and unemployment is at the highest rate for 15 years. A tax cut on fuel is just the medicine the UK needs right now. If inflation gets out of control it’ll be because of high fuel prices, not because of wage increases.”
~ Brendan McLoughlin, Founder, PetrolPrices.com.
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