AA wants freeze in fuel duty

The Treasury is still raking in road fuel duty taxes despite high petrol prices, according to AA figures.

The monitoring organisation believes the high tax take should be enough to persuade Chancellor George Osborne to postpone the 3p-a-litre fuel duty rise planned for January.

Its figures showed Treasury receipts from fuel duty are on course to match last year's total despite the 20-month freeze on fuel duty.

The AA said that in the financial year 2011/12, Revenue and Customs statistics showed that the Treasury received £26.80bn from fuel duty.

This was 1.7 per cent below the record of £27.26bn set the year before and was nearly three times the 1990/91 figure when the Treasury received £9.63bn from fuel duty.

The AA said that since April 2012, consumers had suffered from two wholesale petrol price bubbles that drove the average UK pump price of petrol to a record of 142.48p a litre in the spring and then 140.23p in the autumn.

Wholesale prices collapsed by the equivalent of 10p a litre (including VAT) after each surge but, a month later on both occasions, average pump prices had fallen only 4p a litre.

The AA said figures for April to October 2012 showed that, compared with the same period last year, 527 million fewer litres of petrol (4.5 per cent) were sold. With duty at 57.95p a litre, the reduction is worth £305.4m in lost tax.

Despite this, fuel duty receipts so far this financial year are only 1.2 per cent behind where they were a year ago, the AA said.

AA president Edmund King (pictured) said: "The Chancellor should announce a fuel duty freeze. A freeze will not undermine Treasury tax receipts as the previous above-inflation increases in duty and higher VAT have more than compensated.

"Arguably, the Government would rake in more revenue if it tackled the causes of stubbornly-high fuel prices in the UK - allowing cash-tight businesses, lower-income families and the 28 per cent who restrict their spend on road fuel to use their vehicles as they need rather than as they can afford."

He went on: "Our research shows that the tax take from fuel duty is pretty healthy and would be even better were it not for record fuel prices.

"The motorist is not to blame for duty receipts failing to reach their full potential and should not be punished for having to cut back on car use or for buying a fuel-efficient car.

"Neither is that unfulfilled tax potential an excuse for possible hikes in VED (vehicle excise duty), or even road tolls. If the Chancellor announces higher motoring tax take on Wednesday it is likely to backfire on the economy."