Chancellor Jeremy Hunt has been urged to use Wednesday’s Budget to “end the war against the motorist”. Former home secretary Priti Patel is at the forefront of calls for the Treasury to stop forcing the nation’s drivers to pay tax twice when they fill up their cars.
Conservatives are demanding action to help inflation-burdened Britons.
And there is mounting anger that motorists pay both fuel duty and VAT, with the two taxes accounting for more than half the price of unleaded petrol at the pump.
Ms Patel said: “It is time to end the war against the motorist. Paying tax twice every time is an absurdity.
“It is simply an outrageous burden on drivers.
“It would be unpalatable among drivers for the Government to not only continue this unjust situation but to worsen it by whacking up fuel duty.”
Her warning comes as the Chancellor is under pressure to:
- Keep the 5p per litre cut in fuel duty introduced last year;
- Scrap next month’s rise in corporation tax from 19 per cent to 25 per cent;
- Confirm the Energy Price Guarantee will be extended for a further three months to stop average bills hitting £3,000;
- Unlock business investment by allowing companies to write more off against taxable profits.
The cost-of-living crisis has heightened concern that people who believe they cannot do without a car are being priced off the road.
An RAC analysis shows that of the average 147.42p paid at the pump for a litre of unleaded, 52.95p goes on fuel duty and 27.73p is taken up by VAT.
For the RAC, keeping the cut in duty on petrol and diesel is seen as a priority.
Spokesman Simon Williams said: “While we accept the 5p cut introduced last year can’t last for ever, with household finances under even more pressure this spring than they were a year ago, we don’t think now is the time to be removing it.
“To decide to raise prices by 5p would prove punishing to households and businesses struggling to make ends meet.
“It may have a detrimental effect on both inflation – which the Government is desperate to bring down – and the wider economy.” He added: “We also hope that Mr Hunt isn’t about to become the first Chancellor in 12 years not to cancel the annual planned fuel duty rise.
“If he were to go ahead with it, untold damage could be caused.”
The Alliance of British Drivers is calling on the Chancellor to scrap electric vehicle subsidies and grants for electric vehicle infrastructure, claiming that hardworking people are subsidising the “virtue signalling metropolitan elite”.
Brian Gregory, chairman of the ABD, said: “At a time when people have been facing unprecedented costs, it is completely unreasonable to prioritise the tiny minority of those able to afford the unnecessary luxury of an electric vehicle.”
Conservative MP Craig Mackinlay, who chairs an all-party group which campaigns for fair fuel prices for motorists
and hauliers, echoed Mr Gregory’s comments.
He said: “Hard-pressed drivers have had enough of being treated as cash cows while the well-heeled benefit from grants, low tax and subsidised infrastructure in the dash to electric cars, paid for by the taxpayer.”
The MP for South Thanet added: “Electric vehicles are proving unpopular, with range anxiety and unreliability at the top of people’s concerns. The country is not ready for this leap into untried technology and it’s clear the 2030 ban on new petrol and diesel cars should be halted and the taxes levied on drivers reduced in the Budget.”
It is strongly expected that the Chancellor will introduce a three-year business break so companies can save 25p on their tax bill for every £1 that is invested.
This coincides with the ending of the 130 per cent “super-deduction” capital allowance on plant and machinery.
A permanent replacement to the scheme is expected in the next manifesto.
“Pro-growth” group Britain Remade said that businesses face a “double whammy” with corporation tax going up and the super-deduction ending at the end of the month.
Welcoming reports of the scheme, campaign director Sam Richards said: “This would boost investment in UK renewables, such as offshore wind and solar, while improving our competitiveness as the US and EU move to support clean energy and renewable technologies.”
The planned rise in corporation tax is causing concern among many Tories.
Mansfield MP Ben Bradley said: “Like most Conservative colleagues, ultimately I want to see taxes falling, not rising.”
North East Hampshire MP Ranil Jayawardena, environment secretary under Liz Truss, warned that the “great potential” for growth outside the EU “will be stifled if we end up with corporation tax at 25 per cent, double the 12.5 per cent in Ireland”.
But it is not just Tories voicing opposition to the possible increase.
Former foreign secretary and ex-SDP leader Lord Owen has written in a paper for the Institute of Economic Affairs saying cancelling the intended rise would “send the right signals” to “encourage inward investment and more entrepreneurship”.
And Mark Littlewood, director-general of the Institute, said: “Britain today faces the highest tax burden since Clement Attlee was Prime Minister.
“The Chancellor should review his plans to raise corporation tax and instead use his Budget to introduce pro-growth measures to encourage businesses to our shores.”
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