'Cut petrol tax' callCar organisations demand oil tax system

08 September 2005

Two motoring organisations are calling on Gordon Brown to tackle rising oil prices by radically changing the way the government collects tax on petrol.

Both the RAC Foundation and the Association of British Drivers (ABD) want the Chancellor to introduce a sliding tax system which collects less duty as oil prices rise and more when they fall.

They say this will stabilise the cost of motor fuel and benefit millions of motorists currently facing a hit as the price of crude reaches levels not seen since the late 1970s.

Last year's average price at the pumps was 80.9p a litre but the RAC Foundation says that more than 59.3p of that went to the government in duty and tax.

However, it maintains a differential fuel duty system would at least offer a partial cushion to road users from the price instability in world markets.

Edmund King, executive director of the RAC Foundation, said:'In light of the record world oil prices and instability in the markets the Chancellor should help to stabilise fuel prices by introducing a variable tax. Current hikes are fuelling inflation and hitting those low-income and rural car-dependent motorists hardest.'

'The Chancellor could and should introduce a mechanism whereby fuel duty is reduced if world prices hit a certain level and increased if they fall below another level.'

The ABD says a new sliding-scale fuel tax system would stabilise the cost of motor fuel at around 70 - 75p a litre.

'Plans for road charging as an alternative to fuel duty are an expensive, long term fantasy. Action is needed now to stabilise fuel prices.'