The Freight Transport Association has urged the Chancellor not to increase fuel duty in next month’s Budget after the Institute for Fiscal Studies warned George Osborne might be forced to do so.
The IFS said on Tuesday Osborne might be forced to raise prices at the pumps to meet his election pledge to eliminated the deficit of £3bn in the country’s finances.
Such a move would hinder the “still fragile recovery” and further weaken confidence, the FTA warned.
Now was the time for further reductions in fuel duty to keep the economy growing, it said.
“Regardless of the price of oil, for every penny fuel duty goes up it costs truck and van operators around £100m in a full year,” said James Hookham, the FTA’s deputy chief executive. “It won’t make them drive any less - goods still need to move to where they are needed - and it won’t help them invest in making their vehicles and drivers even more efficient. It will just cost them a lot of money.”
The freezing of fuel duty rates at 2011 levels had meant FTA members reliant on commercial trucks and vans had been spared the “economically stifling effects” of a tax on a commodity they had no option but to buy.
Instead, they had been left with cash in their trading accounts to spend on hiring more staff or purchasing other goods, all of which had served to drive the UK economy out of recession at one of the fastest growth rates in the developed world.
“All this additional spending has actually generated more income tax and VAT, so fuel duty freezes are never as costly as the headline figures suggest,” Hookham said.
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