Government debates slashing fuel duty and VAT by 40%

The UK government debated slashing fuel duty and VAT by 40% for two years in a session at the House of Commons yesterday (23 May). Read the full report on the House of Commons debate here. A petition calling for the reduction closed on 18 April with 102,133 signatures. Once a petition receives 100,000 signatures, it will be debated by MPs in the House of Commons. The petition says that by implementing this change, the government could effectively "offset the rise in fuel prices since 2020". As recently as last Thursday (19 May), the RAC announced the average UK price of petrol and diesel had hit new records of 168.24p and 181p per litre respectively. For the year to date, the price of petrol has risen 25p and diesel 32p. RAC spokesperson Simon Williams told Autocar: “It’s clear just how many drivers feel strongly about the current extreme prices they face every time they fill up, which is no doubt why pressure is mounting on the Government to go further in helping them manage their spiralling costs.” “The simple fact is that the historic fuel duty cut hasn’t protected drivers as much as hoped from further record high pump prices. Wholesale fuel prices kept on rising after the cut was announced, largely cancelling it out, and some retailers even started taking a bigger margin than they did before. “A temporary cut in VAT would have made more sense and we continue to believe such a move should be seriously considered by the Government. It’s also important to remember that the Treasury is actually benefiting from prices being so high as it makes more in VAT, which seems wrong given the current cost-of-living crisis.” Tonia Antoniazzi, Labour MP for Gower, will open the debate, while exchequer secretary to the treasury Helen Whateley will respond for the government. The government said in November last year it was "taking targeted action to help families across the UK with the cost of living, which includes freezing fuel duty in 2022-23, the 12th consecutive year.” In a survey of petitioners conducted ahead of Monday's debate, many respondents said they had to drive to get to work or access essential services, some 62% said rising fuel costs have a "significant effect" on their social lives, 38% said their ability to work had been impacted and many said they were making "difficult sacrifices" to compensate. In recent days, the government has also expressed concern that petrol retailers are not passing on a recent cut in fuel duty to consumers. A 5p per litre reduction in fuel duty was implemented in March in an effort to compensate for raised costs as a result of the war in Ukraine, but business secretary Kwasi Kwarteng said in a letter to retailers yesterday that it "does not appear to have been passed through to forecourt prices in any visible or meaningful way".

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Government debates slashing fuel duty and VAT by 40%

Debate held in Commons in reaction to petition over soaring cost of petrol and diesel

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