Taxation

Press Release: Budget 2021 – Why A Hike in Fuel Duty Would Be Folly

By 1st March 2021 No Comments

ISSUE DATE: 28 February 2021

Centre for Economics and Business Research (CEBR) Report highlights the economic damage from even a 2p rise in fuel duty.

ABD Spokesman Paul Biggs said: “Despite a 10-year freeze on fuel duty UK diesel taxes are the highest in any major economy and petrol taxes are amongst the highest. It’s a concern that Chancellor of the Exchequer Rishi Sunak may be persuaded to raise fuel duty as a result of his 3rd March Budget despite the negative effects this will have on any post Covid-19 economic recovery. The ABD urges the Chancellor not to give in to ‘green’ virtue-signalling. A cut in fuel duty would make much more economic sense than a rise.

The key findings (1) of the Fair Fuel UK (FFUK) and RHA commissioned CEBR report (2) include: 

• Any rise in fuel duty would generate very little revenue.

• A 2p rise in fuel duty would create economic damage, cutting GDP by about £600 million and reducing employment by about 8,000 jobs. It would add 0.6% to the CPI (inflation).

• A rise in fuel duty would hit the poorest motorists most. Motorists in the poorest 10% of the population spend proportionately twice as much on fuel as the richer groups. A rise in fuel duty is regressive.

• CEBR research has shown that the policy of freezing fuel duty, in place since 2011, has been highly successful, reducing the CPI by 6.7% compared with where it would have been and boosting household expenditure by £24 billion. With a policy that has proved successful, it would be bizarre to change it.

Notes for editors

(1) Summary of CEBR Report:

The Impact of Imposing an additional 2p on Fuel Duty

(2) Full CEBR Report

https://fairfueluk.co/CEBR-Fuel-Duty-Impact—Nov-2020/2/

(2) Full CEBR Report:

https://fairfueluk.com/CEBR-Fuel-Duty-Impact—Nov-2020/2/

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