Fuel
duty increase fudge in Budget on 8th July 2015?
A
headline of a news item in today's Sunday Times says "Osborne’s fuel
tax ‘fudge’ to give Treasury £4bn fill-up".
The item speculates on whether the Chancellor may reinstate inflationary rises
in fuel duty in his early Budget on 8th July whilst arguing he has frozen fuel
duty in real terms though clearly not in cash terms.
See
our series of Budget reports
Posted: 150607
|  | As
we have seen from the regular Budget reports on the V8 website the Chancellor,
George Osborne, has frozen fuel duty on petrol and diesel at 57.95p a litre for
more than four years by repeatedly cancelling the increases planned by the previous
Labour administration. That was the longest fuel duty freeze in 20 years. The
combined effect of that fuel duty freeze has been most welcome for motorists,
particularly when crude oil prices and hence motor fuel prices have been high,
but whilst over the last six months or so crude oil prices have fallen substantially
there has been a modest recovery lately. The Chancellor is now working on his
first "early Budget" of the new administration period following the
General Election in May and with his commitments to freeze many taxes inevitably
he is looking at other areas where tax revenues can be generated.
The Sunday
Times' article
suggests reintroducing inflation | rises
on fuel duty would see the duty rise by 12% to 64.91p a litre by 2019-20 according
to inflation forecasts from the Government's Office for Budget Responsibility.
The Institute of Fiscal Studies calculates that this would add almost £5
to an average 50 litre fuel tank once VAT is added on top and raise an estimated
£4.1bn of tax derived income for the Treasury by the end of the decade than
by keeping fuel duty at the present level.
The article ends with the classic
report that "the Treasury refused to be drawn on the prospect of tax increases
saying only "We're not commenting on budget speculation"." |
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