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AA makes plea for fuel tax rethink as diesel duty rises 6p a litre in a year

By / 8 years ago / Latest News / No Comments

The organisation's figures show that a litre of petrol, now costing on average 132.61p a litre, generates 22.10p in VAT, up 4.94p from a year ago. Petrol then cost 115.25p, with 17.5% VAT producing 17.16p a litre tax for the Government.

VAT from diesel has risen from 17.29p a litre a year ago to 23.10p now, up 5.81p a litre, reflecting prices that average 138.60p now compared to 116.11p this time last year.

As a result, the AA says that the Government is already seeing a substantial additional income from rising fuel prices and should rethink the fuel duty rise planned for 1 April.

Edmund King, the AA's president, said: 'With rising pump prices bringing in even more additional VAT income, the Government would still enjoy the significant boost to national finances without pushing ahead with the fuel duty increase on 1 April. With many drivers already forced to cut back on car use and petrol sales down by at least 3.4%, the fuel duty increase will not only push more drivers into road fuel poverty but undermine fuel duty revenue.'

He added: 'The last government predicted a £0.2 billion fall in fuel duty receipts from higher pump prices 2009-10, but still went ahead with a  fuel duty escalator. They expected that receipts from 2010 onwards would fall another £0.7 billion a year if oil prices rose $20 or more a barrel.

'Drivers hope that the Coalition Government will recognise in next week's Budget that a further fuel duty increase on top of soaring pump prices will weaken demand and hit the economy. '

For more of the latest industry news, click here.

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