More action needed on fuel duty, says business group

18 July 2008

The government’s decision to postpone the 2p per litre increase in fuel duty planned for October should only be a first step in helping businesses cope with soaring fuel costs, the Forum of Private Business (FPB) has argued.

The FPB has given its support to a plan put forward by the Freight Transport Authority (FTA) to halve the duty for some lorries.

Research by the FTA found that a 25p per litre rebate for smaller firms would be the best option.

Although such a move would cut government income from around £1 billion to £413 million per year, the FTA said, the rebate would boost public coffers by some £200 million due to increases in the Corporation Tax take, business growth that would generate additional tax income, new fuel purchases by foreign operators working in the UK and increased employment.

Nick Palin, the FPB’s director of finance and administration, said: “While the postponement of the proposed 2p rise in fuel duty is welcome news for our members, the FPB would like the government to go further and actually cut VAT on fuel, instead of deferring the increase every six months. With surging oil prices, adopting the FTA's proposals would at least bring some relief for small businesses.”

James Hookham, the FTA’s director of policy, added: “The transport industry is clearly suffering from the massive increases in the price of diesel whilst the UK operates the highest levels of duty in the whole of Europe. With the EU about to remove the present limits on foreign lorries working in the UK, now is the hour for the Government to deliver some practical steps to support the industry.”