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Osborne may scrap fuel duty hike

Chancellor of the Exchequer George Osborne has said that he may cancel a previously planned increase in fuel tax this year.

Gordon Brown’s Labour government had proposed a penny per litre increase in fuel duty to take
effect from April 2011. However, the current coalition government has seen increasing pressure to
reverse the decision, with motorists already feeling the pinch with the recent VAT increase and rising
global oil prices.

In a radio interview yesterday, Chancellor Osborne said: “We can override it, we are looking at that
… We are also looking at the idea that we put forward before the election, of what’s called a fuel
duty stabiliser. So petrol goes up, the oil price goes up – the government steps in to try and protect
people from the effects of that.”

According to a report this month from the AA, unleaded petrol prices rose 6.2 pence in the previous
month to 128.3 pence per litre. Diesel prices increased 6.6 pence to 132.8 pence per litre. They
have estimated that the UK has the fifth highest unleaded petrol price in Europe, and the second
highest diesel price – with the government taking about 60 per cent of the pump price in taxes.

Discussing the delivery of his annual budget to parliament on the 23rd of March, George Osborne
said: “The budget is in March, so it’s before the April duty rise. So if we are able to do something
about it, we will be able to do something about it before April, but we will have to wait to the
budget I’m afraid.”

The Treasury has estimated that if the tax hike does go ahead, it will see its fuel duty income for
2011/12 increase from £27.3 billion to £28.9 billion.

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