Businesses have called on the chancellor to scrap the planned 2p rise in fuel duty after oil prices hit a record high yesterday.
The rise, postponed during the last Budget until October, could bring in an extra £450m for the government, said the Federation of Small Business (FSB).
The organisation urged the government to share the tax proceeds of ‘higher than predicted’ North Sea oil prices with consumers, motorists and small business owners by implementing an ‘automatic adjuster system’ to reduce fuel duty.
“High fuel prices are crippling small business owners in every sector,” said John Wright, the organisation’s national chairman.
“A mechanism which automatically uses extra oil tax revenue to reduce fuel taxes would be an efficient, effective and fair way of delivering some relief to motorists. The question is whether the government will act,” he said.
Meanwhile, the AA accused market speculators of driving up the price of oil.
“Oil prices have doubled since last year and this is not just due to strong demand from China and other nations,” said Edmund King, president of the AA.
“While huge profits are made in the financial centres, an increasing number of car owners are becoming desperate and businesses are suffering from the hit on consumer spending.”
Chris Hannant, head of policy at the British Chambers of Commerce, added that the high oil prices are pushing businesses to the ‘absolute edge’.
“Sending a positive message to business would make a huge difference, and the government should start by announcing that they are scrapping the 2p hike in fuel duty,” he said.
“The treasury is already receiving a massive windfall from above expectation oil prices, which makes any extra fuel levy totally unjustifiable.”