A rural fuel duty rebate pilot scheme has been given the green light from the European Union, to start on March 2012.

The Treasury has confirmed that a 5ppl tax discount will apply to fuel sold in Scotland’s Inner and Outer Hebrides, Northern Isles, the islands in the Clyde and the Isles of Scilly.

Fuel retailers will receive a 5ppl rebate on the petrol and diesel they purchase, which is required to be passed on to motorists. To ensure retailers suffer no cash-flow problems in passing on the discount from March 1, they will be able to claim the 5ppl rebate from HM Revenue and Customs on fuel purchased from January 1.

Meanwhile, RMI Petrol made a final missive to Chancellor George Osborne to axe the proposed fuel duty rises prior to his Autumn Statement on November 29.

As Forecourt Trader went to press, the content of the Chancellor’s Autumn Statement was unknown, but in RMI Petrol chairman Brian Madderson’s letter he recommended "in the strongest possible terms" cancellation of the planned fuel duty rises echoing the sentiments of 116 MPs involved in the backbench debate in the House of Commons on November 15.

With the government’s increased VAT rate of 20%, Madderson explained that the duty increase of 3.02ppl planned for January 1, will in reality add 4ppl to the pump price. A further deferred increase at the same level is due on August 1. "Let me reaffirm our estimate that this combined 8ppl overall tax rise will take as much as £3.5bn a year out of the consumer’s pocket," Madderson stressed to the Chancellor. "From customer evidence on our forecourts across the UK, we know that household budgets will be rocked by this post-Christmas tax penalty."

RMI Petrol believes that any fuel duty rise next year will:

1. Place new pressure on UK inflation with possible consequences for interest rates.

2. Reduce fuel sales even further and so reduce total potential tax revenue.

3. Increase the already serious levels of fuel-related crime such as laundering, smuggling, and theft by drive-offs, ’no means of payment’, and tank siphoning.

4. Disadvantage any possible economic recovery.

5. Mask all political and social gain from MP Danny Alexander’s proposed rural fuel duty rebate scheme, due to be announced imminently.

6. Increase the current closure rate of independent operators, especially in the economically challenged rural areas.