Staveley Head

January 28, 2011 09:58 ET

Government to Reconsider Petrol Tax

CHESHIRE, UNITED KINGDOM--(Marketwire - Jan. 28, 2011) - It would appear that, despite earlier reports to the contrary, the Government has not discounted the plan to cancel the 1p tax increase on petrol which is due to come into effect in April. It also believes that its "fair fuel stabiliser" is a workable prospect despite criticism of the scheme earlier this week by Robert Chote, head of the new independent economic watchdog.

David Cameron first revealed his idea of a "fair fuel stabiliser" in 2008 although it did not form part of the Conservative election manifesto. The basic concept is that the rate of tax would reduce as oil prices rise and increase as they fall.

In the last two years the price of petrol has increased by almost 50% as a result of higher oil prices and Excise taxes, and whereas the Government badly needs this additional revenue it must now consider the negative impact this extra cost is having on both the private motorist and businesses alike. You can only squeeze a lemon for so long before it runs dry.

While scrapping the planned 1p per litre tax increase would help in the short term, it will do little to alleviate the anticipated ongoing future increases in the price of petrol. The owner of an average family saloon would save just 50p per fill-up if the 1p increase were abolished.

It is widely believed that the Chancellor will veto the 1p increase to appease motorists and thereby allow the Treasury more time to plan the details of a fair fuel stabiliser. Mr Osborne is anxious to dispel unrest amongst the motoring public and also head-off proposed demonstrations by hauliers who are planning to protest over high fuel prices. He told the BBC "If we are able to do something about it we will do it before April." The Chancellor is due to present his Budget to the House of Commons on March 23rd.

A spokesman for Staveley Head, one of the country's leading motor trade insurance providers, said "During the last two years, while we have been enduring the worst recession for eighty years, the price of petrol has increased by almost 50%. This is a double whammy for the motorist. Not only is he paying more for his petrol, but the increased transport and distribution costs incurred by businesses is leading to inflationary prices in the shops."

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