The chairman of the PRA Brian Madderson has written to the chancellor urging him to cut excise duty to boost the economy after the Covid-19 lockdown.
In his letter Madderson said independent petrol retailers were concerned that the high levels of excise duty and VAT were constraining the prospects of a significant recovery in the economy.
He stated that while some operators were advocating a cut to VAT the PRA believed that a cut to Excise Duty could be more beneficial, citing Treasury analysis from 2014 which found that a fuel duty cut would provide a GDP-boosting stimulus to the economy.
It said: “Modelling work suggests in the long-term reductions in fuel duty will result in an increase in GDP against the baseline of between 0.3 and 0.5 per cent. This leads to between 37 and 56 per cent of the static cost of the reductions being recovered.”
Madderson concluded his letter saying: “We would welcome discussion with your fuel tax team as soon as practicable.”
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