A cut in duty on alternative fuels such as HVO in next month’s Budget will help make businesses switch to greener choices and drag the tax system out of the past, according to a fuel card provider.
Paul Holland, MD at Corpay company Allstar, said the conversation about UK fuel duty was kicked down the road at every Autumn Budget and yet if the Chancellor was serious about growth then cuts were one of the fastest ways to achieve it.
He said keeping the current 5p per litre freeze on fuel duty was not a political gesture; it stopped inflation entering every corner of the UK economy.
“Fleets are on the frontline of costs,” Holland said.
“A penny on duty doesn’t just hit a business or fleet, it feeds straight through into the weekly shop, the cost of a parcel, the price of a pint of milk.
“Cleaner fuels like HVO, which could cut emissions by up to 90% compared to diesel, are still taxed at the same rate as conventional fuels. I find that hard to fathom.
“If the government really wants businesses to switch to greener fuels, then the Autumn Budget is the moment to act.
“Reward operators who make the greener choice, cut duty on alternatives, and you’ll see momentum fast.”
Holland added: “Trucks and vans are essential, but they’re also a huge carbon contributor. We need a Budget that recognises fuel duty as a lever for growth and a lever for decarbonisation.
“Right now, the government is leaving one of the simplest wins on the table. I say cut the duty where it makes sense, and businesses will do the rest.”
His comments came as the Institute for Fiscal Studies (IFS) said inflation forecasts showed leaving fuel duty at its current level would end up costing the Chancellor £5.4bn a year by 2029-30.
“For fuel duties to provide the Chancellor with any assistance in meeting her fiscal rules, she would need to announce increases above and beyond the almost 7p per litre nominal increase in duties,” the IFS said in a Budget report.
It added that there were still questions over the long-term future of motoring taxation amid the transition to cleaner fuels: “Once cars sold prior to 2035 reach the end of their working life, this will entail the loss of almost all of the £24 billion of revenue collected through fuel duties and much of the £9 billion raised from vehicle excise duties.
“The fact that the government has no stated plan to deal with such a substantial fiscal adjustment is not encouraging.”
