Slash fuel tax by 9p now, say City money experts

May 6, 2008 | By | In Statistics

Chancellor should act to hand back extra tax drivers payThe Government should cut fuel tax by 9p per litre, says a top firm of City accountants. Petrol prices today reached up to 115.9p per litre for unleaded (£5.27 per gallon) and 130p for diesel (£5.92 gallon).

Accountants Grant Thornton have punched the buttons on their calculators and concluded that the Treasury is currently earning an extra £12.75 million per day in fuel revenue, compared with a year ago. Even if prices didn’t increase further, over a year this would earn the Government a £4.68bn windfall – enough to wipe 9p off fuel tax.

But deferring this autumn’s planned 2p per litre rise in fuel duty, would cost just £550m. Edmund King, spokesman for the AA, says the Chancellor, Alistair Darling, should not only do this, but he should also cut another 2p at least.

Price comparison site uSwitch predicts that drivers could soon be spending 15% of their take home pay just to keep their tanks filled. If, as predicted, petrol prices reach 150p per litre, an average tankful will cost £84 – that’s nearly twice the £49.22 motorists paid in mid-2007.

For a driver covering 12,000 miles a year, the bill will come to £2636. Average take-home salary next year will be £19,200.

Ann Robinson of uSwitch said the increases could force some drivers to take the bus and leave cars at home. But, she said, drivers who need their cars for business, or who travel from rural areas, will be hardest hit because they won’t have that option.

Do you think the Government should cut fuel tax? Vote in our Motor Mouth poll.

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