Pressure is mounting on the Chancellor to cut the fuel duty in the spring statement to reduce the burden of soaring fuel prices on consumers and businesses.
Latest RAC data reveals the average price of a litre of petrol rose to 163.71p yesterday (14 March), while diesel recorded another all-time high at 173.68p.
To alleviate the impact on drivers and businesses, the Petrol Retailers Association (PRA) has urged the Government to use the upcoming spring statement to cut fuel duty.
In a letter to the Chancellor, the PRA’s executive director Gordon Balmer said: “Fuel prices have soared and with rising energy costs, it is crucial that the consumer and business does not bear the brunt of these skyrocketing costs any further. It falls upon the Government to take steps to alleviate the pressure on households who are already struggling to pay the bills.
“The PRA urges the Government to follow the example of Ireland in cutting fuel duty to reduce the burden of soaring fuel costs. The Government is well positioned to implement this measure as the high cost of fuel has seen VAT revenue increase, which would help mitigate the cost of cutting fuel duty.”
Balmer explained that while forecourt operators had done what they could to alleviate the increases, many were currently operating on negative fuel margins and had had no choice but to pass on the rapid increase in the wholesale price of petrol and diesel to motorists.
Additionally, the letter outlines how the current crisis comes at a time when fuel operators are working hard to also adapt to the Government’s Net Zero Strategy, exploring costly infrastructure investments.
“We look forward to engaging further with the Government on these issues,” it added.
Logistics UK has also urged for a temporary reduction in diesel fuel duty to protect businesses in its sector.
Writing to Chancellor Rishi Sunak, Elizabeth de Jong, the business group’s director of policy, said: “Logistics businesses, which operate on very narrow margins of around 1%, are currently facing significant increases in the price of fuel. These additional costs cannot be absorbed by logistics operators and it is unavoidable that much of these cost rises will need to be passed on to end customers as a result.”
Fuel is the single biggest expense incurred by logistics operators and the price of diesel at forecourts is now 24% higher year-on-year after crude oil hit a 14-year high on 8 March 2022.
Meanwhile, the RAC continues to lobby the Government to temporarily cut VAT on fuel to at least 15% to “save homes and businesses from untold financial pain”.
Speaking last week, RAC fuel spokesperson Simon Williams said: “As it stands 26p a litre of what drivers are paying on the forecourt is attributable to VAT and that comes on top of 58p a litre in fuel duty. This tax on a tax is causing unbelievable financial pain to drivers which is why we believe Mr Sunak holds the key to easing the burden.”
