Pressure mounts for 2p fuel tax hike to be scrapped

Cars on motorway

Lorry drivers, business leaders and MPs are putting pressure on Gordon Brown to scrap plans to increase fuel tax by 2p this autumn.

Higher fuel tax was meant to come into effect on 1 April 2008 but the rising cost of crude oil caused the government to delay the plans until October.

However, the cost of crude oil continues to soar, hitting a record price of $135 a barrel in May. The result is higher petrol costs for motorists. The average cost of petrol currently stands at 114.2p per litre - 18% more expensive than this time last year, according to the AA.

It adds that, in the past month, diesel prices have risen by their highest margin this century and are now almost 12p per litre more expensive than petrol. A litre of diesel currently costs around 126.7p.

The increased burden on motorists has sparked renewed calls for the government to scrap its plans to increase fuel tax. Some figures suggest the increased tax will negatively impact nearly 70% the UK's 26 million drivers and could add an extra £245 a year on the cost of running a family car.

Chancellor Alistair Darling is due to meet with his fellow Labour MPs today after 42 of them signed a Commons Motion asking him to reconsider the tax plans.

Even non-drivers face having to pay extra for the increased cost of driving, with business leaders claiming the surging cost of petrol is pushing many businesses to the brink of survival.

Chris Hannant, from the British Chambers of Commerce, says: "Something needs to be urgently done or increasing numbers of companies will be left with no choice but to pass extra costs onto customers.

"[…] the government should start by announcing that it is scrapping the next 2p hike in fuel duty, planned for October. The Treasury is already receiving a massive windfall from above expectation oil prices, which makes any extra fuel levy totally unjustifiable."

Hundreds of lorry drivers have convened in London today to protest against the 2p fuel tax rise. They are also calling for HGV drivers to be granted a rebate on road taxes.

The government is also facing pressure to abandon the introduction of new tax bands that would penalise the most polluting cars. The changes, due to come into force in 2009, would apply vehicle excise duty (VED) to cars based on their carbon emission.

The Conservative Party described the plans as a “ticking timebomb”.

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