Fuel price rise provokes controversy; Government to review fuel tax policy
Sun 18 September 2005
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Following the rapid rise in petrol and diesel prices - to over £1 a litre at some outlets - the Government is reported to be planning a review of fuel taxes.
The Independent on Sunday said (18 Sept) that the Chancellor is planning to carry out a wide-ranging review of fuel duties. John Healey, Financial Secretary to the Treasury, is expected to coordinate the group which will meet for the first time before the pre-Budget report in November.
The RAC Foundation lead earlier calls for the Chancellor to bring in a variable fuel tax regime. Executive Director Edmund King, speaking on BBC Radio 4 said: "As world oil prices go up and down the duty would be varied to achieve a constant price.
"We have said to Government that in order to give a bit more stability, if the world price goes up to $65 [a barrel] you could take 1.5p a litre off the duty."
There was a chorus of protest from environmental groups, lead by Friends of the Earth, who published research which claimed that drivers could save more by choosing a fuel efficient car than through a cut in fuel duty, even if this were as high as 10p/litre.
FoE's Transport campaigner, Tony Bosworth said: "Buying a fuel efficient green car instead of a gas-guzzler could save drivers hundreds of pounds a year in fuel bills. The Chancellor should encourage more drivers to buy greener cars by putting up car tax on gas guzzlers and cutting it for the most fuel-efficient models. Cutting fuel tax won't help tackle climate change, but greater incentives to use greener cars will."
Liberal Democrat Shadow Transport Secretary, Tom Brake, said that the RAC Foundation was wrong to call for variable fuel taxes. "The best and most transparent solution would be no fuel duty or road tax combined with road user pricing based on location, congestion and vehicle emissions," he said.
The Freight Transport Association (FTA) called on the Government to reduce fuel duty for commercial vehicles to support UK industry.
The Road Haulage Association also expressed its 'disappointment' that the UK Government had not followed the example of French and Belgian Governments in softening the blow of rising fuel prices for some sections of industry.
The Chancellor had already agreed to postpone the rise in fuel duty, planned for this month, following the rapid rise in oil prices on world markets.
Related Links
Independent story link
Friends of the Earth press release
RAC Foundation press release
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