Axe fuel tax rise, businesses urge

Treasury to scrap a planned rise in fuel duty.

The increase of 2p per litre, due to take place in April, will cost the haulage industry £170 million, according to the British Chambers of Commerce (BCC).

Fuel duty went up by 2p a litre in October, and the average price of a litre of unleaded is now over 104p.

A further increase in fuel duty of 1.84p is due in April 2009.

In a letter to chancellor Alistair Darling, the firms said: "We are alarmed by the signals that the government appears to be sending to such a crucial industry at a time when the economy appears to be stalling."

The warned Mr Darling that firms, especially hauliers, faced record high oil prices, a 'staggering' tax burden and increased foreign competition.

The firms said hauliers would be made less competitive than European rivals.

In reply, the Treasury said by 2010 duty rates will be lower in real terms than in 1999.

David Frost, director general of the BCC, said the tax would further erode the UK?s international competitiveness.

A Treasury spokesman said: "In last March's budget the government announced fuel duty rates for the next three years, providing certainty for business and sending the right environmental signals in our fight against climate change, while continuing to fund vital public services.

"The changes were made alongside reforms to vehicle excise duty that cut rates for less polluting vehicles and a number of measures to support hauliers which they have welcomed."

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