The Government was today warned about the serious consequences of their proposed Duty increases by Brian Madderson, RMI Petrol chairman. In his letter to the Chancellor of the Exchequer, he detailed concerns for the independent petrol retailing industry ahead of the Autumn Statement. Although the previous Government’s ’escalator’ will be replaced by a ’fair fuel stabiliser’, the precise mechanics of this new scheme have yet to be announced.
Madderson said road fuel volumes had plummeted since 2008 from a combination of high taxes and high global oil prices which produced record levels at the pump of 137ppl for petrol and 143ppl for diesel last May. Despite Brent Crude oil prices falling from around US$125/barrel to a recent low of US$100, wholesale prices to UK retailers in £/litre remained stubbornly high, partly a result of the weakening pound sterling.
“What remains as the backbone of this new ’stabiliser’ package is the ’in real terms’ inflation element plus VAT," explained Madderson. "A fuel duty increase of 3.02ppl (assumes RPI at 5.2%) was announced in the 2011 Budget for implementation on January 1, 2012, which with 20% VAT means an overall tax increase of 4ppl.
"The next fuel duty increase on August 1, 2012, seems set to follow the ’stabiliser’ format and with RPI forecast to peak in the New Year close to 5.5%, this could result in another 4.00ppl tax hike.
"If these proposed fuel duty increases were to be implemented, together they would add up to a staggering 8ppl tax hike in just seven months – a level never before seen in the UK.
“The impact will be to take a massive £3.5billion out of the consumers’ pocket next year when every household and business is already under immense financial strain. It is the antithesis of fair taxation to which this Government is pledged.
“With unemployment hitting a 17-year high this month, most retailers worrying about falling demand trends, the UK economy failing to ignite, inflation still climbing and independent forecourts continuing to close, the Government needs to address this smouldering tax bomb with the Chancellor’s Autumn Statement. It cannot be right to press ahead with either of these crippling tax hikes next year, so the Government must announce cancellation of both planned duty increases without delay.”