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UK road fuel tax highest in EU, warns AA

With the Budget due on Wednesday and fuel duty frozen until after the election, the AA challenges all political parties to commit in their election manifestos to:

  • A continued freeze on fuel duty – at least until it matches the average of the three highest levels of fuel tax in neighbouring EU countries;
  • Two-thirds of fuel duty receipts being ring-fenced for road improvements, maintenance, better gritting coverage, street lighting, green motoring infrastructure, cycleways and safer pavements.

Analysis of road fuel tax levels in Europe shows that, despite UK fuel duty being frozen at 57.95p since March 2011, drivers in this country still pay the biggest chunk (69%) per litre than those in other European countries.

In the past calendar year, government figures show that the UK has consumed 17.672 billion litres of petrol and 27.985 billion litres of diesel. With fuel duty frozen at 57.95p a litre, the 45.7 billion litres of road fuel generated £26.5bn in road fuel duty.

Two-thirds of fuel duty receipts alone would pump £17.7bn into financing the UK’s roads – double what is currently spent in England. Department for Transport statistics show that, in 2013/14, £3.156bn was spent on national roads and £5.194 billion on local roads – a total of £8.35bn.

Diverting £17.7 billion into roads-related expenditure would still leave £8.8bn from the remainder of fuel duty receipts, £6.1bn from vehicle excise duty, a further £9bn from VAT on fuel, and £15bn from VAT on car sales, company car tax and insurance premium tax – to go into general taxation.

Department for Transport figures show that Highways Maintenance Funding in England will fall from £901m next financial year to £801m in 2017/18, with the prospect of £725m in following years.

Allocations from the fund for roads will fall from 82.42% to 75% from 2018/19 onwards, when the fund will be split: A roads 25%, B and C roads 25%, U roads 25%, Bridges 14%, Lighting 2% and Cycleways and Footways 9%. Until then, the split is: A roads 27.47%, B and C roads 27.47%, U roads 27.47%, Bridges 15.38%, Lighting 2.20% and Cycleways and Footways 0%.

“AA members appreciate that, with huge swings in the price of petrol and diesel since 2011, the Government’s freeze on fuel duty hasn’t added to the burden on family and business finances. But, the fact that UK drivers still pay the highest level of fuel tax in the EU shows just how massively pumped up fuel duty was before the Coalition froze it,” said Edmund King, the AA’s president.

“It still generated more tax for the Government than business rates and only £400m short of council tax receipts in 2013/14. Consequently, so many drivers are saying, rather than a cut in fuel duty, we want a continued freeze and more of it spent on what it is supposed to do: keeping UK roads fit for purpose, upgraded to meet new demands and making them safer. Drivers are sending out a strong message to all political parties that they could vote with their wheels unless there are clear commitments to fair taxation and expenditure.” 

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 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. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.