THOUSANDS BACK CALL TO CUT FUEL COSTS

…but government resists calls to make running your classic cheaper

MPs debated dramatic measures to cut the price of fuel at Westminster on Monday in response to an e-petition with 102k signatures. The petition, entitled ‘Reduce fuel duty and VAT by 40% for a period of 2 years’, opened in October last year but the debate comes at a time when total tax on fuel (excise duty plus VAT) stands at 44-49 per cent, or around 81p per litre. Owners of large diesel cars now face bills of more than £150 per tank.

Existing measures to mitigate against price rises – such as the 5p reduction in duty in March – were described multiple times during the debate as ‘woefully inadequate’. The government was called upon to ensure that any tax cuts would be passed on to consumers and not absorbed by retailers. Tonia Antoniazzi MP said: ‘We quickly see price rises when oil prices go up but we rarely see lower prices when the price of oil falls.’

Examples were also given of many European governments cutting fuel taxes this year, including Ireland’s 20 per cent and 15 per cent cuts in excise duty on petrol and diesel respectively.

Peter Grant MP, referring to Scotland’s North Sea oil industry, asked: ‘How can it be that a supplier country gets poorer when the price of a commodity goes up? Somebody somewhere is ripping Scotland o˜.

Is it not time that the Government started regulating the price of fuel at the pump, even temporarily, in the same way that they regulate domestic electricity and gas prices?’

Justin Madders, MP for Ellesmere Port, said that the treasury has to wean itself o˜ fuel duty as part of the transition towards electric vehicles and called for ‘e˜ective and rapid ways of putting more money into the pockets of those who need it most’.

No Conservative back-bench MPS attended the debate but Helen Whately MP responded for the government by resisting multiple calls for a windfall tax on oil producers, saying: ‘We stand ready to do more’.

In its written response to the petition, the Treasury said: ‘Whilst the rationale of this petition is appreciated, any reform to the current VAT of road fuel would carry a significant cost to the Exchequer, and this should also be seen in the context of the over £50 billion of requests for reliefs from VAT received since the EU referendum. Such costs would have to be balanced by increased taxes elsewhere, increased borrowing or reductions in Government spending.

'Given this, there are no current plans to change the current VAT treatment of road fuel.’

Drivers are being crippled by record high pump prices, and more rises are expected.