Rishi Sunak risks damaging the economy by raising fuel taxes by 23% – research shows inflation will GROW if he does so

MOST governments rarely evaluate the long-term outcome of their monetary decisions.

Nowhere is this more evident than in fuel prices.

Rishi Sunak's refusal to deny that fuel taxes will rise is another sign that the government is not planning for the economy in the long term

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Rishi Sunak’s refusal to deny that fuel taxes will rise is another sign that the government is not planning for the economy in the long termCredit: PA
23 per cent increase in fuel tax will mystify millions of voters and lose Prime Minister more Tory base support

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23 per cent increase in fuel tax will mystify millions of voters and lose Prime Minister more Tory base supportPhoto credit: Getty

Last month the Office for Budget Responsibility dropped a bombshell on 37 million motorists – there will be a 23 per cent hike in fuel taxes (equivalent to around 12p plus VAT) in the March 2023 budget.

And despite a continued outcry from already-pressured motorists, the government appears to be sticking by it.

On Tuesday, before this week’s parliamentary liaison committee, Prime Minister Rishi Sunak refused to deny the increase in the fuel tax, a position that will mystify millions of voters and strip him of even more Tory grassroots support.

The cost of this is staggering – the annual cost for a typical van driver would be an extra £1,000. For a truck driver it’s a whopping £7,000.

I commissioned a group of highly qualified economists to assess the impact of the levy hike on the world’s most heavily taxed drivers – us.

And their conclusions are damning.

The absurdity of even raising fuel taxes is clear to most of us.

But not for those green, lycra-clad special government advisers who see tax hikes and vehicle bans as the only way to save the planet.

The widely respected gurus at the Center for Economics and Business Research have found that any increase in the fuel tax would generate far less net revenue than the OBR anticipates.

In fact, a 23 percent tax hike would cause unimaginable economic damage, eventually reducing our GDP by about 1 percent and cutting employment by about 31,000 jobs.

And that would be just the beginning of the government’s journey into an economic apocalypse of its own making.

Why would Chancellor Jeremy Hunt approve a tax hike that would shrink the economy and put more people in the jobless line?

Worse, Sunak’s mantra when he ran for prime minister to fight inflation would be torn to pieces.

Inflation would actually increase by a staggering 2.3 percent, according to CEBR calculations.

An increase in fuel taxes would hit even the poorest motorists hardest. Measured against their income, drivers in the poorest ten percent of the population spend more than twice as much on fuel as the rich.

The amount of street petrol bought in London falls as car use falls.

Londoners spend two-thirds less on petrol and diesel than the rest of us.

As a result, a fuel tax hike is largely a tax imposed by London on regions.

Key vehicle users, particularly white van drivers and truckers, have already been hit hard in the government’s breakneck pursuit of Net Zero.

The impact of a fuel tax increase will hit critical sectors that already feel they are facing an excessive increase in burdens due to ill-informed decision-making.

With the growth of online business, vans and all forms of logistics are vital to the economy and the fight against the cost of living crisis.

They are the ultimate lifeblood of our nation’s prosperity.

The increase in stress on van drivers has already impacted their willingness to serve new and existing customers.

If this continues, a crucial link in the service chain and our trade veins will break.

The truck industry is already in a fragile situation.

The average age of truck drivers is 53 years, 13 percent are over 60 years old.

Only two out of 100 truck drivers are younger than 25 years.

Their profit margins are estimated at one percent at best.

crash inflation

The number of owners is also declining.

It is conceivable that a tariff hike could be the last straw.

And there’s more bad news.

The Competition and Markets Authority concluded that the 5p tariff cut announced in the March 2022 budget had not been fully passed on.

As The Sun reports today, garages are making a profit while we head off to visit loved ones for the holidays. Merry Christmas!

And despite the recent freeze and ineffective 5p cut, Britain’s diesel taxes are still the highest of any major European economy, while petrol prices are nearly the most expensive.

Thanks to FairFuelUK’s campaigns in partnership with The Sun, the fuel tax freeze policy, in place since 2011, has been hugely successful, cutting the CPI by 6.7 per cent and increasing household spending by £24bn.

If that hadn’t happened, the recession would have been even deeper and inflation even higher.

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So, Chancellor, keeping the fuel tax down has proven successful – it would be bizarre to change that.

I’ll make it easy for your “experts” at the Treasury Department: lowering the fuel tax will stimulate the economy, bring down inflation, restore public confidence and may even keep the government out of the opposition benches.

https://www.the-sun.com/news/6967694/fuel-duty-rise-will-damage-economy-rishi-sunak/ Rishi Sunak risks damaging the economy by raising fuel taxes by 23% – research shows inflation will GROW if he does so

DevanCole

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