Transport buyers see fuel duty fall

23 March 2011
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23 March 2011 | Lindsay Clark

The UK chancellor has cut fuel duty by one penny on a litre and scrapped a system that adds to inflation annually, helping transport buyers keep costs down.

In today’s budget speech, George Osborne said that the fuel duty escalator, which adds an extra penny on top of inflation every year, would be cancelled for the rest of this Parliament – until 2015. At the same time he cut the duty by one pence per litre.

In addition, he announced the inflation rise in duty, planned for next week, would be delayed until next year, while the April 2012 inflation rise would also be put back to the following summer.

Gordon Scott, managing director of UK transport supplier Wincanton welcomed the cut. “It is clear that the current economic conditions will continue to impact us all, but in the face of rising costs and uncertain market conditions it is reassuring to see that the government has acknowledged the critical impact that rising fuel prices can have on businesses.”

Osborne also told Parliament the government would delay this April’s air passenger duty (APD) rise to next year, potentially keeping costs down for travel buyers.

In November 2010, the UK government increased APD by up to 55 per cent, making it as much as £170 for ultra-long-haul premium flyers.

Reform to these air travel taxes was also on the agenda, Osborne said. “We hoped we could replace the per passenger tax with a per plane tax,” he said. “We have tried every possible option, but have reluctantly had to accept that all are currently illegal under international law. So we will work with others to try to get that law changed.”

In the meantime, he said the government was consulting on how to change existing air passenger duty bands and bring private jets, which pay no duty at all, into the scope of taxation.

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