Treasury Wallowing in a £1bn VAT Bonanza from Drivers

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Coverage Briefing

With the highest prices at the pumps ever recorded, the Chancellor in the last 12 months has benefitted to the tune of an extra £1bn in VAT from the World’s highest taxed drivers filling up.

Pump prices have increased by 28p in the last 12 months giving an extra 4.66p per litre to the Exchequer. With 40bn litres of petrol and diesel sold each year that means an extra £1.86bn of VAT based on current pump prices. But by extrapolation the gradual increase in pump prices, and because businesses can reclaim VAT costs, we have calculated the extra VAT windfall to the Treasury is closer to £1bn.

It means, the Chancellor could cut Fuel Duty by 3p per litre and still benefit from extra VAT pouring in.

  • “We are hearing that Fuel Duty is to be frozen in the October 27 Budget, for the 11th year in succession. That will be a relief, not a celebration. Drivers being attacked by Clean Air Zones, LTNs, notably in London, the threat of the 2030 fossil fuel ban, the painful level of pump prices and being blamed for the environmental ills of the planet warrants a cut in Fuel Duty.”
  • “In the last few days, over 40,000 FairFuelUK supporters have emailed the Chancellor and his Treasury Ministers calling for a significant cut in Fuel Duty. With the shock increase in National Insurance, the loss of £20 Universal Credit, the massive increase in energy prices, oil smashing past $86 and pump prices at their highest ever, any increase in Fuel Duty would be economically irresponsible, needless and a huge betrayal of newly won Tory converts outside of London.”
  • “The Treasury knows full well that cutting Fuel Duty stimulates the Economy. In 2014 they said: “…. cutting duty will increase GDP in the long-term, business profits, wages, and consumption. And as such, all these positive fiscal stimuli will add to higher tax revenues….” In other words, cutting Fuel Duty is an economic stimulus!”

“A punitive rise in Fuel Duty does nothing to help climate change either.”

  • “So, Rishi, please don’t be conned by your urban based well paid special advisors, who see their fashionable green propaganda to justify a fuel tax hike, and to subsidise EV sales. Have the leadership mettle and wisdom to help the world’s already highest taxed motorists, give them a break, at least maintain the freeze, but even better use the extra VAT you’ve enjoyed cutting Fuel Duty big.”
European Fuel Tax Takes - September 2021

European Fuel Tax Takes – September 2021

Background: Since 2011 the APPG for Fair Fuel for UK Motorists and UK Hauliers has examined major issues that impact on UK drivers. Along with FairFuelUK, it has been a major influencer on keeping Fuel Duty frozen since 2011. As well as fuel taxation, other issues addressed by the APPG that impact on drivers, have included congestion charges, ULEZ/CAZs, parking costs, roads investment, unfair treatment for fossil fuelled vehicle owners, solutions to lower emissions, cleaner fuel incentives, alternative technology options and transparent pricing at the fuel pumps with a continual call for PumpWatch. With the expected decline in Fuel Duty revenue, the APPG will also formulate a long-term approach to the future of road taxation and a positive transport strategy for all road users. https://fairfueluk.com

Since 2010 FairFuelUK has saved drivers over £110bn in planned tax hikes in duty and VAT through constructive and objective campaigning. Had FairFuelUK not campaigned to scrap the fuel duty escalator, fuel tax today would be 90p/lt rather than 57.95p/lt. Today we would be paying £1.80+ per litre at the pumps had FairFuelUK not fought for the World’s highest taxed drivers. Because of the Campaign, inflation is down 6.7% and £24bn has been put back into consumer spending each and every year since 2011.

FairFuelUK is a public affairs team with no shareholders to satisfy, just an award-winning campaign representing the real concerns of hard-working motorists, families, small businesses, commercial drivers and hauliers across the UK. Decades of fiscal exploitation by successive Governments with little in return, warrants the need for FairFuelUK.

For 10 years, this award winning campaign has been backed by the RHA, Logistics UK, other respected organisations, 1.7m supporters and 146 MPs) . FairFuelUK is fronted by the Campaign’s Founder Howard Cox. Funding is through support from key founding backers the FTA (Logistics UK), RHA and regular donations from supporters. Previous backers have included the RAC, Association of Pallet Networks, UKLPG and others.


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