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VAT and fuel duty on petrol and diesel

Volume 711: debated on Wednesday 30 March 2022

The petition of residents of the constituency of North Ayrshire and Arran,

Declares that there is an urgent need to address the ongoing spiralling fuel prices across Scotland and the UK, with the cost of petrol and diesel in the UK hitting an all-time high as the average cost of filling up a typical family car has broken through the £90 barrier for the first time ever; is concerned that motoring organisations have warned of “unbelievable financial pain” as fuel prices climb at unprecedented rates with oil prices reaching over $130 a barrel; is mindful that these rising costs will quickly feed into the cost of living as hauliers pass on extra costs to customers and there is genuine concern that inflation could reach 10% this year resulting in the biggest squeeze on living standards since the 1970s; understand that whilst fuel duty has remained at 57.95 pence a litre for the last 1 years, motorists pay an additional 20% VAT of 12p on that fuel duty effectively paying a tax on a tax of every litre of fuel bought before the cost of extractions, purchase, shipment and forecourt sales are added, which also incur VAT; appreciates that the Treasury is raking in billions as VAT on fuel costs at forecourts rockets and other prices rise, accelerating rising inflation.

The petitioners therefore request that the UK Government immediately and urgently reduces VAT on fuel and/or fuel duty to ease the pressure on households, businesses and essential road users and to help keep inflation in the single figures.

And the petitioners remain, etc.—[Presented by Patricia Gibson, Official Report, 22 March 2022; Vol. 711, c. 307.]

[P002722]

Observations from The Exchequer Secretary to the Treasury (Helen Whately):

The Government thank Patricia Gibson MP for submitting the petition, on behalf of her constituents in North Ayrshire and Arran, that—in the context of increasing fuel prices—requests an immediate reduction to fuel duty or VAT on fuel.

The Government recognise that fuel prices have reached their highest ever levels in the recent weeks. That is why the Chancellor announced at Spring Statement 2022 a temporary 12-month cut to duty on petrol and diesel of 5p per litre.

This is the largest cash-terms cut across all fuel duty rates at once, ever, and is only the second time in 20 years that main rates of petrol and diesel have been cut. This cut represents savings for households and businesses worth around £2.4 billion in 2022-23.