Treasury officials are trying to spin their way out of the current debate over fuel duty by suggesting that they are giving £4bn back to the motorist by deferring previous duty increases, says RMI Petrol chairman Brian Madderson.
The Financial Times has reported that the chancellor’s aides say he has provided more than £4bn to help motorists and cannot afford anymore, but, according to RMI Petrol, during the Coalition government’s term of office the net duty rise on fuel can be calculated at +1.76ppl. When the increased VAT rates are applied to the increasing fuel prices it shows the government has already taken £4bn from the taxpayer.
The Treasury will continue to benefit from this VAT “windfall” at the rate of £250m for every 5ppl rise at the pumps, added RMI Petrol, and a “perfect storm” of adverse factors have been ramping up wholesale prices with both petrol and diesel now hitting new highs every day – today reaching 138.27ppl for petrol and 145.24ppl for diesel.
Said Madderson: “Given this volatile background it is possible that diesel prices could reach 150ppl and petrol 142ppl by Easter providing yet more windfall VAT revenue for the Treasury.
“The Chancellor must use this extra fuel tax to cancel the planned 3.02ppl duty increase in his March Budget. This is due to be implemented from 1 August which with 20% VAT will push pump prices up by another 4.00ppl, causing more misery for struggling small businesses and motorists, especially in rural areas.”
Factors affecting wholesale prices include the stand-off between the Western Powers and Iran over their nuclear programme tightens global supply with the EU agreeing to an embargo on oil supplies from Iran starting this summer; the Pound Sterling remaining weak against the US Dollar; financial problems at Europe’s aging refineries possible affecting local UK supply after Petroplus, owner of Coryton refinery in Essex, filed for bankruptcy last December; and Asia and other emerging economies demand for crude oil continues strongly.