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IFS Green Budget comments on fuel duty slammed as ‘pure political propaganda’

In the report, which is published ahead of the Budget every year to highlight the current economic conditions and challenges, the IFS has said that increasing rates of corporation tax, council tax, business rates or fuel duties could help the Chancellor meet his election pledge to eliminate the deficit of £3bn in the country’s finances, even though the recent trend has been to reduce the rates of these taxes.

It added that increasing fuel duties by 10% – adding 7p to the price of a litre of petrol – would raise £2.6bn per year and would bring some environmental benefits, adding “though the evidence is clear that fuel duties are already far higher than can be justified by the carbon emissions from driving and are poorly targeted at reducing congestion, by far the biggest harm done by motoring”.

In response, Quentin Willson, lead campaigner for the FairFuelUK Campaign, said: “The Institute for Fiscal Studies report ignores all the economic stimuli created from the fuel duty freeze. Businesses have sold more and families have spent more because of lower transport costs. The CEBR calculates that the lower transport costs of 2015 raised GDP by 0.6%, created an extra £11.6 billion of spending and created 121,000 jobs. Even The Treasury agree that ‘freezing fuel duty benefits enough to offset almost all the immediate loss of tax income’. Faced with these facts there’s only a couple of depressing reasons why the IFS have come up with their contrary conclusion: they don’t understand how our road economy works and George Osborne is softening us up for a fuel duty hike in the budget.”

Howard Cox, founder of the FairFuelUK Campaign, added: “The report, obviously instigated by the Treasury to prepare us for a fuel duty rise in the Budget, fails to properly acknowledge the positive effects of tax cuts on incentives, economic growth and job creation that have been shown irrefutably to be real by the CEBR. It's the same with the IFS negative analysis of benefit cuts, which have actually encouraged thousands of individuals back into work. The IFS is not being objective in its economics but instead is being used for a Green driven political agenda.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.