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Vehicle tax changes: The increase in fuel tax on gasoline and diesel vehicles may affect key workers

Brian Madderson, chairman of the Petrol Retailers Association (PRA), warned the move could “curb” economic activity in a devastating threat. Chancellor Rishi Sunak is believed to be considering raising fuel taxes to 1 to 2 pence per liter to help stabilize public finances.

The rumors were negatively received by campaign groups and drivers already facing their own financial hardships due to the pandemic.

Mr Madderson said: “We are very aware of the strain the pandemic has on public finances.

“With the current level of traffic, however, a two pence per liter increase in fuel tax would only bring in £ 500 million a year.

“This will serve to limit economic activity marginally and to disproportionately influence important employees.”

READ MORE: An increase in fuel tax would have a disproportionate impact on drivers

FairFuelUK has said that the fuel tax freeze has helped people in the poorest households.

A joint report by FairFuel and the CEBR found that an increase in fuel tax would have the greatest impact on the poorest 10 percent of the population.

The report also found that an increase of 2 or 3 pence would generate very little revenue in the long run.

The increase could translate into revenue increases of between £ 250 million and £ 470 million initially, but that would wane as more shifts to electric cars were made.

They predict the additional revenue could drop to £ 50 to 90 million within 20 years.

Dr. Richard Wellings, director of transport at the Institute of Economic Affairs, has also argued that the fuel tax hike could “damage the UK economy”.

He called each new charge “deeply unfair” as the drivers were already “heavily taxed”.

He said: “The fuel tax is a tax on businesses, trade and jobs. Raising this tax will hurt the UK economy at a time when a strong recovery is urgently needed.

“It is also deeply unfair as road transport is already very heavily taxed compared to other sectors.

“While action is needed to combat rising public debt, ministers should focus on cutting wasteful spending rather than raising harmful taxes.”

Rishi Sunak froze fuel tax last March after claiming road users still relied on their cars.

Prime Minister Boris Johnson had promised that he had no intention of raising the tax before the 2019 general election.


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