Standby for new petrol price hike
The Government is said to be close to lifting the freeze on the fuel duty. The so called ‘fuel duty escalator’ was put in place in 1993 and saw rises in fuel duty over the rate of inflation until it was put on hold in 2010. But that could be about to change as ministers look for ways to increase revenue.
An inflation-linked increase would raise approximately £800 million next year alone with cumulative raises having the potential to bag the Treasury billions over the next decade. In fact, Treasury figures estimate that the current freeze has cost the government £46 billion over the last eight years while saving the average motorist hundreds of pounds.
It has come at a price, however, with a former Government adviser claiming that freezing duty had reduced fuel prices in real terms, resulting in a 4% increase in traffic that had triggered 4.5m tonnes of extra carbon emissions. Despite this, a rise in fuel duty is expected to be extremely unpopular as British motorists are already some of the most heavily taxed in the world. The average price of a litre of petrol in the UK is now £1.28, of that 57.95p is fuel duty. VAT is than charged on top of that price, so 79p (or 62%) of what you pay at the pump is tax. While that might sound a lot, it’s a far cry from the 77% tax peak in 2004 although the average price for a litre of petrol at that time was just 76p.
The news comes at a particularly bad time for motorists as fuel prices have risen due to the weak pound while local spending on roads is less than half what is was in the 1980s.
‘UK riders are already some of the highest taxed’