The Office for Budget Responsibility published its Economic and Fiscal Outlook report which included information about a potential fuel duty law change. It stated that there would be a planned 23 percent increase in the fuel duty rate in late March 2023, which would add £5.7billion to Government coffers next year, but hammer drivers.
This would be a record cash increase, and the first time any Government has raised fuel duty rates in cash terms since January 1, 2011.
If the move was to go through then the current rate of fuel duty – cut from 57.95p per litre to 52.95p per litre in March 2022 – would rise to about 65p.
When VAT is added to this, the change would mean the pump prices of both petrol and diesel by about 12p per litre.
Currently, fuel prices are falling sharply, with the RAC reporting average unleaded costs dropping to 163.7p, while diesel drivers can expect to pay 188.12p per litre at the pumps.
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He said: “They were wrong to assume we are going to do that. That is a decision for the Spring Budget.”
In response to the proposals, Howard Cox, Founder of FairFuelUK, said it would be “economics of the asylum” if fuel duty would be increased.
He added: “Yet another Chancellor, it seems, who doesn’t understand that the cost of filling up is the biggest influence on inflation and the cost of living.
“High fuel costs and taxes damage GDP, close businesses, restrict travel and reduce spending.
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“What happens to MPs when they get into the Cabinet warrants them getting immediate psychotherapy, to understand what the rest of us recognises as common sense and living in the real world of just about managing.”
Craig Mackinlay, MP for South Thanet, called it “curious” and an “outdated assumption”.
He said it was a change that can not happen, adding that “a huge number of MPs” would be against it, branding it “beyond ridiculous”.
Another MP, Jonathan Gullis, said: “This sneaky attempt by the OBR to give the eco woke warriors what they want, punishing motorists in their pockets, is morally wrong.
“The Chancellor needs to listen to motorists, van drivers and truckers, who are already being smacked hard with cripplingly high taxation, and prove to them we, my Government actually have their backs by keeping the price at the pump down.”
A spokesperson for the Treasury said the 23 percent figure came from the OBR and not the Treasury, saying it was based on forecasts that are subject to change.
They added: “We have not announced anything on fuel duty today, the existing 5p cut will remain in place until March 2023, a tax cut which is worth £2.4billion, and final decisions on fuel duty rates will be made at the Spring Budget.”
Chancellor Jeremy Hunt also unveiled plans to start taxing electric vehicles from 2025, and further changes to benefit-in-king tax rates.