The Chancellor, George Osborne, has postponed the scheduled 3p rise in fuel duty, which was set to come into effect in January next year. He gave the news in his autumn statement, which comes after a similar change of heart in June of this year, when the 3p rise was first postponed.
Osborne gave motorists a 1p per litre tax cut in March 2011, but the overall tax take for an average £1.33 litre of unleaded fuel amounts to 60%, inclusive of VAT.
The government's overall income from fuel tax amounts to £27bn per year, but successive chancellors have opted to tread carefully after the fuel protests of 2000, which brought the country to a standstill and severely knocked productivity – thus partly cancelling out any increases in revenue.
Critics point out that the two postponements in fuel duty do not fit in with the coalition government's plans to reduce the deficit. As may be felt by many of our customers who take out breakdown cover, UK motorists are arguably over-relied upon as a source of revenue, especially since driving for many people is not a luxury, but a necessity – for getting to work, dropping the kids to school and simply carrying out daily tasks like shopping.
But as revenues from road tax are set to drop because so many drivers have switched to greener cars in a lower tax bracket, the government is keen to find other ways of safeguarding revenue from motorists. One feels the 3p tax rise will come about at some point.
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