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Fuel Tax

Volume 401: debated on Wednesday 19 March 2003

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To ask the Chancellor of the Exchequer what the impact on road traffic levels he estimates would be from (a) a decrease in petrol duty by 5p a litre, (b) a decrease in petrol duty by 10p a litre, (c) an increase in petrol duty by 5p a litre, (d) an increase in petrol duty by 10p a litre, (e) an increase in petrol duty by 20p a litre and (f) an increase in petrol duty by 50p a litre; and what he estimates the change to revenues to the Treasury would be from (a) to (f). [102476]

I have been asked to reply.We are unable to estimate the impact on traffic of a change in the duty on petrol alone. The estimated effect of a 5p per litre reduction in duty on both petrol and diesel together, based on provisional traffic data for 2002, is to increase traffic levels by around 5.1 billion vehicle kilometres. Similarly, the estimated effect of increasing fuel duties by 5p per litre is to reduce traffic levels by 5.1 billion vehicle kilometres. Successive changes of 5p per litre in fuel duties are estimated to have effects of broadly the same magnitude, although the larger the change the greater the likely error in predicting its effects.The impacts on revenue can be estimated from Table 6 in "Tax Ready Reckoner and Tax Reliefs", November 2002, published by HM Treasury.