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FTA fuel duty increase must be scrapped

The Freight Transport Association says that in tomorrow's Budget the Chancellor must announce that he is to scrap or defer his proposal for a 2p per litre increase in fuel duty from 1 April. FTA says that the increasing price of oil on the world market has created record high prices of diesel for lorry operators and the Government must not load more pain on industry by increasing fuel duty.

During February an alliance of business and motoring representative groups told the Chancellor that the higher cost of transporting goods and services resulting from price rises in fuel had impacted on every single company throughout the UK, and thus on their customers.

Members of the alliance include the Freight Transport Association, Road Haulage Association, Automobile Association, British Association of Removers, British Chambers of Commerce, Confederation of Passenger Transport, Federation of Small Businesses, Forum of Private Business, National Farmers Union, Petrol Retailers' Association and the RAC Foundation.

In its formal submission in advance of the Budget, FTA called for:

Scrapping of the 2p per litre fuel duty increase proposed for 1 April.

Consideration of the option to decouple duty on fuel used in heavy lorries from that for other road users.
Abandoning of plans for above inflation increases in gas oil duty (fuel for railways).
A commitment to extend the freeze in lorry Vehicle Excise Duty for 2009.

The introduction of a time-based charge (vignette) on foreign lorries operating in the UK. Abandoning of plans for an aviation tax on air freight.



The Government collects £5.7 billion in diesel duty and lorry VED from hgvs each year.
The Government collects £41 billion in tax each year from all road users. By contrast it spends just £8.3 billion a year on national and local roads infrastructure.

A 2p per litre increase in fuel duty would cost industry an extra £280 million per year.
UK diesel duty is still double that of the rest of Europe. It needs to fall by 18 per cent litre to achieve parity with France.

Abandoning plans to increase duty on diesel and petrol from 1 April would cost £1,050 million. Offsetting this cost, the Chancellor has had a tax windfall of £450 million in additional VAT revenue from higher world oil prices during 2007 as well as higher receipts from North Sea oil taxation.
Duty represents 57 per cent of the cost of a litre of bulk diesel (excluding VAT).

Foreign competition

One in seven of the heaviest trucks on UK roads is foreign registered. These vehicles contribute nothing towards the costs they impose whilst in the UK in terms of road wear and air quality.

Truck operating costs

Fuel costs represent 35 per cent of the costs of running a 44 tonne lorry.
World oil prices reached new all-time highs of $103 per barrel in early March 2008.
Bulk diesel prices have risen by 24 per cent since March 2007. This alone has increased hgv operating costs by 7 per cent (or £7,500), based on a 44 tonne artic running 70,000 miles per year.

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