Is fuel duty about to be cut? How will this affect you?
This week, Boris Johnson announced plans to cut fuel duty, which would be fantastic news for the haulage industry. At the moment, the cost of fuel duty has been frozen for nine consecutive years, at the price of 57.95 pence per litre for both petrol and diesel.
Last weekend it was reported that Mr Johnson wants to go ahead with a cut, one that forms part of an emergency budget which could take place in the fortnight before the UK leaves the European Union.
These plans have yet to be signed off on, due to concerns about the cost of the policy, with one government source adding: “It definitely has not been agreed, it would be exceptionally expensive. No 10 loves the idea of cutting fuel duty but in the event of a no-deal Brexit people might not actually see the benefit because rising fuel prices will offset the cuts.”
The cost of cutting fuel duty to the Exchequer:
The current calculation of fuel duty cost to the Exchequer is around £9 billion a year but, if fuel duty is cut, that cost is expected to rise to £28.4 billion a year.
Other members of the government hope that keeping fuel prices high will encourage more people to move towards driving electric vehicles.
How a fuel duty cut will affect haulage:
UK fuel duty is a heavy tax burden on the UK supply chain. It drives up costs for both companies and consumers, it undermines competitiveness and soaks up the working capital of haulage businesses. The impact in the more remote areas of the UK is especially damaging.
A cut to fuel duty will put the UK haulage companies on a more level playing field with other EU countries. For instance, one articulated vehicle with a single driver pays up to £14,000 more in fuel duty per year than all of our EU neighbours.
Richard Burnett, the chief executive of the Road Haulage Association, has this to say about the potential cuts: “It is clear that the prime minister and chancellor are listening to us. For years UK hauliers have been operating at a disadvantage to our European counterparts. A cut in fuel duty will go some way to levelling the playing field with the rest of Europe.”
If the government cuts fuel duty by between 3ppl and 5ppl, this will certainly help to boost job creation and economic growth in the UK.