Friday, 14 January 2011

Another fuel duty cut down the road?

The by-election slightly overshadowed my own Daily Record scoopete and the bold prediction within Whitehall that a fuel duty stabiliser, to reduce the cost of petrol and diesel at the pumps, will be part of the March 23rd budget.

This was originally a Road Haulage Association idea taken up by the SNP and Alex Salmond has been on the case again this morning, as has every newspaper in the land. He said that the case for a stabiliser is now "unanswerable".

The Treasury boffins are looking at the practicalities, I'm told, but they will come up with the same answer as they gave Alistair Darling - impossible. It is difficult to achieve or even predict a balance between rising tax revenues from barrels of oil and the loss to the exchequer from reducing fuel duty at the pumps in any way that leaves you with a neutral effect.

The political answer is that the Exchequer will simply have to take a hit by not collecting the increased fuel duty for some time. This is what Gordon Brown did when faced with the petrol protesters in 2000. A few months later he announced a freeze on fuel duty until April 2002 (effectively ending the fuel duty escalator) at a cost of £2bn a year to the Treasury.

George Osborne is the shrewdest politician out and he will be making the fine calculation between electoral gain and economic pain in the next few weeks.

Remember, we also have Danny Alexander's fuel duty derogation for remote islands to look forward to too.

There, it's always better to blog before putting these domestic chores off for another day.

No comments:

Post a Comment