The Government has ‘no option’ but to reverse the Conservatives’ 5p per litre fuel duty cut in the upcoming Autumn Budget, according to the RAC. The motoring organisation is urging the Government to adopt a pay-per-mile tax system to replace it quickly.
This follows chancellor Rachel Reeves’ disclosure of a projected £22bn overspend, as well as an £86bn annual deficit forecasted by the Office of Budget Responsibility. Prime Minister Sir Keir Starmer previously refused to rule out a rise in fuel duty in the forthcoming Budget.
Simon Williams, the RAC’s head of policy, noted the Treasury’s £2bn loss from the cut and the £1.6bn overcharge last year, advocating for a pay-per-mile system amid increasing electric vehicle adoption.
He said: “We’ve reached the conclusion the chancellor has no option but to put Fuel Duty back up to 58p a litre in October’s Budget. She knows the 5p discount is losing the Treasury £2bn a year. She also knows drivers were overcharged by a staggering £1.6bn last year according to the Competition and Markets Authority’s recent report.
“We’d normally be against any increase in duty, but we’ve long been saying drivers haven’t been benefiting from the current discount due to much higher-than-average retailer margins.”
Mr Williams also commented on the fact that increasing numbers of EVs on the road means an ongoing loss of revenue for the Government. He said: “As more and more EVs come onto the roads the Government will need to tax drivers differently.
“We think replacing Fuel Duty with a pay-per-mile system as soon as possible is the way forward as then the only tax levied on fuel would be VAT. This would give retailers nowhere to hide.”
For more road safety news, check out the Anglo Liners blog. Alternatively, get in touch for a free, no-obligation road marking quote.