FTA calls on govt to shelve 2p fuel duty hike plan
Date: 23 July 2007
The Freight Transport Association (FTA) has called on the government to drop plans to increase fuel duty by two pence per litre from October.
Such an increase would greatly impact the freight haulage industry and put UK logistics firms at a competitive disadvantage compared with continental companies.
Now the FTA has told Angela Eagle, the exchequer secretary, that the plan to hike duty must be dropped. The price of bulk diesel has risen by more than five pence per litre since the end of January this year, the group notes, meaning that fuel costs for a 40-tonne articulated lorry have increased by £2,300 per annum.
Because such a large fraction of haulage firms' operating costs are tied up in fuel, this increase is already hitting the industry hard.
"The planned fuel duty increase of two pence per litre may have seemed reasonable to the chancellor at the time of the Budget when oil prices were at $60 per barrel," said FTA chief economist Simon Chapman.
"However, the policy now looks out of touch bearing in mind recent fuel price changes. The chancellor should announce a change of plan, recast his revenue budgets, and signal a freeze in fuel duty until April 1st, 2008 at the earliest."
At the current time the bulk diesel price in the UK is 77.9 pence per litre, compared with 60.1 pence in Germany, 54.1 pence in the Netherlands and 50.5 pence in Belgium.
HM Revenue and Customs explains that "rates for fuel duty levels are decided by the chancellor on a Budget-by-Budget basis, taking into account all the relevant economic, social and environmental factors".
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