Will the Chancellor vary duty on petrol and diesel?

The Road Haulage Association has requested that the Chancellor vary duty levels on petrol and diesel so that the price at the pump for both fuels will remain approximately the same.

For years, the two fuels have been approximately the same pump price, and even as recently as mid-2007, diesel was only 2p or 3p higher than petrol.  However, in the last twelve months the price of diesel has opened up a gap of anything up to 15p, partly due to market demand but also the failure of the UK to invest in diesel refining capabilities.  Currently, it looks as though this price difference will remain the same.

For UK business, diesel is a key fuel as haulage companies add the cost of diesel onto the price that consumer have to pay for food and goods from the shops.  More than forty per cent of cars sold in the UK are now diesel as they give a better mpg than petrol cars and hence have a smaller ‘carbon footprint’.

RHA Chief Executive Roger King, said:

“It makes sense to ensure that diesel users are not penalised compared with petrol users.  As diesel and petrol sales volumes in the UK are roughly the same, a 5p a litre reduction in diesel duty could be off-set by a 5p a litre increase in petrol duty; in the current market that would simply restore the price position of the two fuels to the well-established position of a year ago.

“The reduction would also go some way to closing the fuel duty gap between British trucks and those fuelled elsewhere in the EU, including Ireland, where duty levels are half that of the UK. The all-party transport committee says the duty difference is ‘patently unfair’ (Freight Report, para 116) and Lib Dem Treasury spokesman Vince Cable has noted that it is doing great damage to the British road haulage industry

“We believe that we have won the argument in respect of UK/EU fuel duty levels for hauliers; and using the duty level to restore the intended balance between petrol and diesel prices is a practical way of giving British hauliers a more level playing field on which to compete.

“It is important to remember that diesel duty paid for trucks is a tax on British business – and a heavy one at that, making British industry less competitive.  Diesel and petrol users should share the pain of high oil prices equally.”

Most HGV drivers support the call of the RHA and they await the Chance

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