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Budget 2007 Leave green measures to industry says FTA

The Freight Transport Association is urging the Chancellor to keep tomorrow’s Budget focussed on a business agenda. The call comes following an unworkable set of recommendations from the Environmental Audit Committee aimed at focussing taxation on reducing carbon dioxide emissions. The Commons Committee called on the Chancellor to consider reintroducing the Fuel Duty Escalator and creating deeper incentives for the uptake of road fuels with a high biofuel content.

Simon Chapman, FTA’s Chief Economist said, ”The proposal to reintroduce the Fuel Duty Escalator is madness. UK motorists are already over-taxed. Diesel duty in the UK is currently 48.35 pence per litre compared to an average elsewhere in the EU of 23 pence per litre. The cost to motorists of raising fuel duty further is far higher than the Government’s own estimates of monetary value on carbon savings that the hike in duty would achieve. Vehicle manufacturers and the freight industry already have fuel efficiency and measures to reduce fuel use at the top of their agenda. More tax would simply exacerbate the competitiveness problems created for businesses and the economy by current fuel duty differences.

‘With UK fuel duty so far out of kilter with the rest of Europe, FTA believes there is a strong case for freezing duty levels. If the Chancellor chooses to increase fuel duty, this should be limited to inflation and business must have sufficient advance warning of the increase to make changes in contracts with customers.

‘The proposal to increase the tax advantage of fuels containing a higher proportion of biofuels is equally flawed. The UK currently has a sliding linear scale of duty reduction based on a fuels biofuel content. A 5 per cent blend attracts a 1 pence per litre tax advantage. A 50 per cent blend would attract a 10 pence per litre tax advantage. Escalating the incremental advantage as the biofuel content rises makes no sense, particularly as sources of sustainable biofuels remain fragile. Forcing greater biofuel uptake through the tax system risks jeopardising the sustainability of biofuel supplies.’

FTA will be available for comment on the Budget before, during and after the Chancellor’s speech tomorrow (21 March).

The Commons Environmental Audit Committee Report on the Stern Review is available at:

Click to access 227.pdf

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