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Chancellor George Osborne has announced the government will not go ahead with the 3p fuel duty hike which was due this August.
The coalition disappointed motorists when Osborne failed to drop plans for the fuel duty increase in the Budget in March. Osborne argued that he had already scrapped the annual fuel tax escalator and cut fuel duty by 1p in his 2011 Budget, saving motorists £4.5 billion.
However, following pressure from motoring groups and a Labour threat to force a House of Commons vote on the issue, the chancellor has said fuel duty will be frozen for the rest of the year.
Osborne told MPs: 'Rising global prices have increased the cost of living for families here in Britain...this coalition government will do everything it can to help.
'We have already frozen council tax, kept mortgage bills low and abolished the fuel duty escalator. We will now stop any rise in fuel duty in the autumn and freeze it for the rest of the year. This means fuel duty will be 10p a litre lower than planned by the last Labour government.'
He added: 'We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time. The one-off cost will be fully paid for by the larger than forecast saving in departmental budgets.'
Shadow chancellor Ed Balls had urged the government in an interview with The Independent today to use the £500 million Olympics underspend to cover the cost of scrapping the increase in fuel duty.
Balls said allowing the fuel duty rise to happen would be an 'own goal' for the government and add more pressure to families. He added that there had been a 20% fall in oil prices this year but pump prices had failed to come down.
John Walker, national chairman of the Federation of Small Businesses, said: 'The 3p rise in fuel duty which was due in August was going to damage small firms that are already being crippled by the high cost of petrol. So it is excellent news for businesses and households that the chancellor had postponed it until the end of the year.
'We would urge the government to not put a fuel duty stabiliser in place to remove the volatility of fuel prices and help small businesses plan ahead.'
The fuel duty U-turn follows climb-downs over the 'pasty tax' and the taxation of static caravans. Osborne had planned to add VAT on to hot takeaway food but following lobbying by bakers, including Greggs, the government changed the rules to exempt just-cooked foods from VAT. It also U-turned on its plan to add VAT to the price of static caravans to bring them in line with mobile caravans.
Comments (5)
The governement need tax receipts to cover the deficit and reduction in increase of fuel duty would have been more approriate.
16:17 on 26 June 2012
He would not need to cancel it if the petrol companies passed on the decreases in the cost of oil to the customers - as they should (they must be running a cartel!).
We now have the cost of oil per barrel as low as when we where paying £1 per litre. They are now ripping us off - the price of a barrel of oil goes up - the next day the price at the pump goes up - the price of a barrel goes down and a month later we are still paying the same price at the pumps.
Then we get this bullshit about how stock bought at higher prices have to be worked through the system - completely ignoring the fact that we all know it works both ways
17:20 on 26 June 2012
I'm sure it's got absolutely nothing to do with State and Public Sector pensions, the rises for which in April 2013 will be determined by CPI inflation in September 2012. He seems confident of making savings the elsewhere, though.
18:41 on 26 June 2012
The Government needs the money, but does not want to put up the cost of living now that inflation is coming down. Raising the price of diesel is much more inflationary than petrol. So the Chancellor could have increased the tax on petrol and not diesel. By doing this the Government would have got much needed revenue without having much effect on the price of goods in the shops.
For anyone who does not understand my reasoning, it is based on the fact that everything we buy at some stage is transported in a diesel, not petrol, powered truck or van. Buses and most taxis also use diesel.
21:48 on 26 June 2012
Hypocritical gutter crawling opportunist, that is Ed Balls, who was part instigator of the of the fuel tax escalator, as well as pension robber. Need one dwell on he and his wife's defrauding the taxpayers on their "expenses", for their self enrichment. Did they pay tax on that? I doubt it.
And then there was the PFI scam. Such is his business acumen, that he (and his former boss) have left the taxpayer to pick up the tab for bills that make the fuel escalator pale into insignificance. Just so that they could have some pennies to squander.
None of the aforementioned would have ever even contemplated terms on a mortgage of their personal property which they happily got their govt to sign up to.
Question, why don't the interviewers persist on those questions and not allow them to duck the issue.
They should be in prison on 3 counts, at least, fraudulent expense claims (say 5 years), pension raid-ongoing and also by present govt (10 years), PFI criminal negligence 5 years, to run consecutively, and sacked, no gold plated pension, and restitution order and financial penalty, no legal aid for defence.
15:15 on 27 June 2012
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