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Planned fuel-tax increases would be "crippling" for UK economy and consumers - Bryan Madderson, RMI Petrol
Although the previous Government’s “escalator” will be replaced by a “fair fuel stabiliser”, the precise mechanics of this new scheme have yet to be announced.
Road fuel volumes have plummeted since 2008 from a combination of high taxes and high global oil prices which produced record levels at the pump of 137ppl for petrol and 143ppl for diesel in May this year. Despite Brent Crude oil prices falling from around US$125/barrel to a recent low of US$100, wholesale prices to UK retailers in £/litre have remained stubbornly high, partly a result of the weakening pound sterling.
Madderson commented: ‘What remains as the backbone of this new “stabiliser” package is the “in real terms” inflation element plus VAT. A fuel duty increase of 3.02ppl (assumes RPI at 5.2%) was announced in the 2011 Budget for implementation on 1 January 2012 which with 20% VAT means an overall tax increase of 4.00ppl.’
The next fuel duty increase on 1 August 2012 seems set to follow the “stabiliser” format and with RPI forecast to peak in the New Year close to 5.5%, this could result in another 4.00ppl tax hike.
If these proposed fuel duty increases were to be implemented, together they would add up to a staggering 8.00ppl tax hike in just 7 months – a level never before seen in the UK.
He continued: ‘The impact will be to take a massive £3.5bn out of the consumers’ pocket next year when every household and business is already under immense financial strain. It is the antithesis of fair taxation to which this Government is pledged.
‘With unemployment hitting a 17-year high this month, most retailers worrying about falling demand trends, the UK economy failing to ignite, inflation still climbing and independent forecourts continuing to close the Government needs to address this smouldering tax bomb with the Chancellor’s Autumn Statement. It cannot be right to press ahead with either of these crippling tax hikes next year, so the Government must announce cancellation of both planned duty increases without delay.’