Car tax changes: Petrol and diesel fuel duty rises could have a ‘disproportionate’ impact

Budget 2020: Rishi Sunak reveals fuel duty freeze

Chancellor Rishi Sunak is said to be considering increasing fuel duty for the first time in almost a decade to help bring the country’s finances back under control. It is believed fuel duty could rise by between 1 and 2p in the Chancellor’s next budget which will raise the cost of driving for almost everyone.

However, Conservative MP Craig Mackinlay said any rise in petrol tax would be “bad for the economy” and affect those struggling most.

He warned poorer drivers already spend more on fuel than wealthier groups and the updates could have a “disproportionate tax impact” for road users.

He said: “Fuel duty rises are not supported by the public because they are bad for the economy, bad for business and bad for jobs.

“Motorists in the poorest 10 percent of the UK population already spend proportionately twice as much of their disposable income on fuel as wealthier groups so increasing fuel duty will have a disproportionate tax impact.

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“The Chancellor must reject the green lobby’s calls and continue the successful and popular freeze on fuel duty.”

Fuel duty has remained at 57.95p since 2011 with successive freezes costing the Treasury over £100billion.

The Treasury claims freezing fuel duty has saved the average driver over £1,200 since the scheme was launched in 2010.

Sir Robert Chote, the Former Chairman of the Office for Budget Responsibility said there was now a strong case to end the charge.

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He warned the Treasury needed to “bite the bullet” as part of a reevaluation of public finances.

However, a report from the CEBR and FairFuel has warned any rise in fuel duty would generate little revenue.

They also warned money generated from fuel duty would be less than a fifth of current levels by 2040 as more motorists switched to electric models.

They have predicted a 2p rise could generate between £250 to £470million in the short term but would drop to just £50 to £90million within 20 years.

MP Robert Halfon has warned a fuel duty increase would “damage the foundations of recovery”.

He said: “Levelling up must mean cutting the cost of living for working people.

“At a time when those on lower incomes are struggling financially, a fuel duty increase would level down – far from building back better it would damage the foundations of economic recovery.”

Last year, Rishi Sunak froze fuel duty for a tenth successive year after declaring drivers still needed their cars.

Prime Minister Boris Johnson also previously promised he had “no intention” to raise fuel duty ahead of the 2019 election.

FairFuel UK founder Howard Cox said the U-turn could be “political suicide” and could alienate voters who swung to the Conservatives in the Northern Red Wall.

He said: “Rishi is risking political suicide by breaking Boris’s promise* to the nation prior to his landslide election.

“Especially to those in the new Tory Red Wall seats, when he clearly said fuel duty would not be hiked.”

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