Fuel tax pressure grows

Business groups have repeated their call for the Government to scrap the forthcoming 2p increase in fuel duty, as the Tories propose a new tax system to compensate for fluctuating oil prices.

The Forum of Private Business (FPB) and the Freight Transport Association have issued a joint call for the 2p increase in fuel tax, planned for October, to be scrapped.

The forum has reiterated its claims that the tax is 'unfair' on small businesses that are already suffering from the credit crunch.

FPB member Bill Hockin, from William C Hockin Transport Limited, said that the fuel tax situation could cripple or even ruin his firm: "This is the perfect storm, with foreign competition from European hauliers, who pay less tax than us in the UK, and rising fuel costs."

What Car? Magazine recently launched a petition against VAT on fuel, which it says costs motorists in the UK £25 million every day, up from £19 million a year ago.

Meanwhile, the Conservatives have proposed a 'fair fuel stabiliser' system, in which fuel duty would be cut when the price of oil increased. The tax would then go up when oil prices fell.

However, Liberal Democrat Treasury spokesman Vince Cable criticised Shadow Chancellor George Osborne for "presuming a knowledge of future trends in oil prices which is not shared by most people who look at these professionally".