The Chancellor has shown a continuous reluctance to increase fuel duty, and in his speech to the Conservative party conference in September he said that he wanted to freeze fuel duty for the rest of this Parliament. However, the FTA has highlighted that this came with the significant clause “provided we can find the savings to pay for it".
In response, the FTA says it has briefed the Treasury on the economic benefits of a reduction in fuel duty, including creating jobs, boosting GDP and, in some circumstances, delivering a net increase in tax revenues, as shown by two studies – the first by the Centre for Economics and Business Research and the second (on the Treasury’s recommendation) by the National Institute for Economic and Social Research. The modelling shows the effects to be optimised at a reduction of 3ppl – this is the amount by which FTA has urged the Chancellor to reduce fuel duty.
The FTA adds that it believes the Chancellor could go still further by announcing an extension of the existing policy of fixing duty rates for road fuel gases relative to diesel rates to at least the next 10 years, and by introducing incentives for low emissions truck technologies via the capital allowances system. This would provide confidence for operators considering investment in these lower emission heavy goods vehicles. The association has also made a strong case for the reinstatement of the duty differential for used cooking oil as a bio-fuel in commercial vehicles.
Commenting on the issue, Theo de Pencier, FTA’s chief executive, said: ‘While we appreciate the difficult trading and fiscal conditions that persist, and the constraints which these impose, we have written to the Chancellor urging him to confirm his commitment to freeze fuel duty until 2015. We believe that such a step would provide just the kind of stability needed to give businesses the confidence to invest in the future – but he can go even further.
‘When the Chancellor delivers his Autumn Statement on 5th December, he must take the steps needed to ease the burden of fuel duty and help hard-working families and the countless businesses that rely on road transport to deliver their goods and services.'