RMI Petrol backs fuel duty freeze, highlights demand drops
The Retail Motor Industry Federation’s RMI Petrol department has welcomed chancellor George Osborne’s decision not to increase fuel duty in January. “RMI Petrol believe the chancellor has made the right decision to cancel the fuel duty increase planned for 1 January 2012” Brian Madderson, RMI Petrol chairman.
The association reports that the increase would have raised prices at the pump by 4.00 pence per litre (ppl) within days. Based on current average UK pricing this would have pushed diesel to a new record high at over 145ppl and this grade is steadily gaining market share at the expense of petrol.
RMI Petrol added that, even with this standstill, the UK still levies the highest duty on diesel in the European Union (EU). Duty needs to be cut by 26ppl to achieve parity with the average diesel rates across the EU. Foreign HGV’s and other diesel powered vehicles are still entering the UK with full tanks up to 1500 litre capacity. RMI Petrol estimates this duty disparity loses HM Treasury at least £1.2bn/year in fuel tax, as well as continuing to threaten our small/medium size hauliers. This needs to be urgently addressed by Government.
Madderson continued: “Whilst an easy option for the Treasury, fuel tax unfairly penalises the low income earners, single families and rural communities that often have poor public transport alternatives. There is evidence that driving habits are changing as consumers struggle to balance their household budgets.”
The high prices are also said to have affected demand and point to a reduction in the number of miles drive, which in turn affects tyre demand. Retail fuel sold has dropped by over 4 billion litres in the last 4 years mainly as a direct result of higher pump prices with the net duty increase of 7.60ppl and change from 15 to 20 per cent VAT.