Hauliers cry foul over increase in fuel duty
Road hauliers reacted furiously last night to the increase in fuel duty planned by Alistair Darling to help offset the cut of 250 basis points in VAT.
“This an outrageous announcement,” said Roger King, chief executive of the Road Haulage Association, summing up the industry’s response.
The association is “bitterly disappointed and angry” calls to help British companies facing unfair competition from Euro rivals who pay less in fuel duty were not heeded, Mr King said.
He pointed out the cut in VAT will not help hauliers because they are able to reclaim the levy but a rise in duty marks a real increase in operating costs.
RHA national chairman Andy Boyle said: “I am absolutely livid. If things were not bad enough, it now seems we have a chancellor who does not understand his own tax system.”
Freight Transport Association policy director James Hookham said: “For a chancellor who said he wanted to support British business through troubled times, Alistair Darling has a cynical disregard for the cashflow problems of small and medium sized commercial vehicle operators.
“By offsetting the reduction in VAT with an increase in fuel duty, he has added thousands to the transport bills of companies across every sector.”
But Mr Darling did say he would be phasing in the new rates of vehicle excise duty (VED) car tax with increases limited to £5 a vehicle in 2009 and the swingeing increases originally fixed for more-polluting vehicles drastically reduced.
He said it would be wrong to go ahead with changes in vehicle excise duty in a way that placed “undue burdens” on motorists. “So I have decided to help people by phasing in new rates and lower increases,” he told the Commons.
“In 2009, duty rates for all cars will increase a maximum of £5 as has been normal practice. Second, from 2010, we will bring in differential increases in duty.”
Under the original proposals, some cars would have seen increases of up to £90.
“I now propose the more polluting cars will see duty increased but up to a maximum of £30 – and less polluting cars will see no increase or a cut of up to £30.”
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders said Mr Darling had “made a positive first step to help restore consumer confidence and kick-start responsible spending”.
He also welcomed the “scrapping of penal increases in VED” but said he was disappointed Mr Darling had not reversed his “showroom” tax plans for the first year of a vehicle’s life. David Smith, chief executive of West Midlands-based luxury carmaker Jaguar Land Rover (JLR) said: “Lowered VAT and the deferred changes to Vehicle Excise Duty will help the automotive industry.
“But we still believe there is a lot more that needs to be done to support businesses through a very difficult periods, especially with regard to the flow of credit, trade credit insurance and on-going investment for the long-term.”
Eric Wallbank, an automotive industry analyst at Ernst & Young in Birmingham, said lower fuel costs would probably help JLR’s customers, but doubted if the cut in VAT would stimulate sales of new cars much.
“It might make a difference of between £200 and £250 on the price of an average car, but consumers expect discounts of £1,000 or £2,000 already,” Mr Wallbank said. “It has never been a better time to buy a new car.”
AA president Edmund King said that on fuel prices Mr Darling was “giving with one hand and taking away with the other”.