Energy and Environment

“Regressive” fuel duty should be reduced, urges IEA expert

Commenting on reports that Chancellor Jeremy Hunt is planning to extend the 5p fuel duty cut for another year, Andy Mayer, Energy Analyst at free market think tank the Institute of Economic Affairs, said:

“Fuel duty is a punitive tax, particularly for those on low incomes and traders and commuters outside major cities.

“The UK’s rate is one of the highest in Europe, and the 5p cut last year is one of the least generous.

“There is no environmental case, the rate is already 3-4 times higher than the UK carbon price, and other charges are used to discourage congestion.

“Although his estimate has increased since, the 2006 Stern Review put the cost of fixing the damage caused by climate change in the UK at £14bn. The annual take from fuel duty far outweights this.

“This is a regressive charge that harms those most exposed to the cost-of-living crisis. Further reduction is long overdue and to consider putting it back up is deeply unwise.”