MPs set to debate petition calling for 40% cut in fuel duty and VAT for two years

MPs set to debate petition calling for 40% cut in fuel duty and VAT for two years
On Monday 23rd May, MPs will debate a petition calling for a 40% in fuel duty and VAT for a period of two years, following the sharp rise in the price of fuel and the ongoing cost of living crisis.

The debate is set to take place after more than 100,000 people signed a petition.

Earlier this week, diesel prices hit an all-time high – with the cost of petrol also rising due largely to the ongoing impact of the Russian invasion of Ukraine.

Less than two months after Chancellor Rishi Sunak announced a 5p a litre cut on the average price of fuel – prices have continued to rise.

The previous high of 179.90p was recorded on March 23rd 2022 – the day of the Spring Statement from Sunak. The price per litre is fast approaching the record levels of 167.3p per litre set on March 22nd.

The petition states: “The Government should reduce the cost of fuel through a reduction of 40% in fuel duty and VAT for two years. This can effectively offset the rise in fuel prices since 2020.

“The price of diesel and petrol is at an 8-year-high. We believe people may understand to a degree the need for tax following the pandemic, however prices of £1.50 or more per litre will cancel out any understanding. The Government has the ability to sacrifice some revenue to appease the British public.”

The petition was started before the Russian invasion of Ukraine, which has accelerated the issue across the UK.

To see the latest prices of petrol and diesel, visit RAC Fuel Watch.

Ahead of the parliamentary debate, on the VAT front, the Government said: “While the rationale of this petition is appreciated, any reform to the current VAT treatment of road fuel would carry a significant cost to the Exchequer, and this should also be seen in the context of the over £50 billion of requests for reliefs from VAT received since the EU referendum.

“Such costs would have to be balanced by increased taxes elsewhere, increased borrowing or reductions in Government spending. Given this, there are no current plans to change the current VAT treatment of road fuel.”

However, in recent weeks the some of the world’s largest oil companies, including BP and Shell, have reported records profits – despite calls for windfall taxes and for fuel prices to be cut to help out the British public.

In response to the outcry and the ongoing rises, Business Secretary, threatened fuel firms with legal action over their ‘profiteering’ – and insisting that the 5p fuel duty cut announced in the Spring Budget be passed on to drivers.

In a public letter, he said: “(The public are) rightly expressing concern about the pace of the increase in prices at the forecourt, and rightly frustrated that that the Chancellor’s fuel duty cut does not appear to have been passed through to forecourt prices in any visible or meaningful way.

“It is also unacceptable that different locations even within the same retail chain have widely different prices. The Chancellor and I therefore want to re-emphasise and communicate again our expectation that members do everything possible to ensure that drivers are getting a fair deal across the country.”

After diesel prices hit record high prices earlier this month, RAC fuel spokesperson Simon Williams said: “Sadly, despite the Chancellor’s 5p a litre duty cut the average price of a litre of diesel has hit a new record high at 180.29p. Efforts to move away from importing Russian diesel have led to a tightening of supply and pushed up the price retailers pay for diesel. While the wholesale price has eased in the last few days this is likely to be temporary, especially if the EU agrees to ban imports of Russian oil.

“Unfortunately, drivers with diesel vehicles need to brace themselves for yet more pain at the pumps. Had Mr Sunak reduced VAT to 15% as we call on him to do instead of cutting duty by 5p, drivers of diesel vehicles would be around 2p a litre better off, or £1 for every full tank. As it is, drivers are still paying 27p VAT on petrol and 29p on diesel, which is just the same as before the Spring Statement.

“The average price of petrol is also on the rise having gone up nearly 3p a litre since the start of the month to 166.65p which means it’s less than a penny away from the all-time high of 167.30p set on 22 March.”

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