GORDON BROWN must rethink recent duty hikes on red diesel, the Federation of Petroleum Suppliers has written to tell the Treasury.
Since 2003, both the Chancellor‘s budgets have raised excise duty on the fuel, increasing the Treasury‘s takings more than twofold.
The 2003 Budget raised duty from 3.13p/litre to 4.22p/litre, which was then increased again to 6.64p/litre; a rise of 112% which is subject to VAT.
The second hike has been postponed because of high oil prices, but a further announcement is expected in December‘s pre-budget report.
Susan Hancock, FPS chief exec, said that the reasons given by the government for the increases were nonsensical.
The increased duty did nothing to force users to seek more environmentally-friendly options, which are few in any case, and the fraudulent reselling of red diesel as road diesel was still very profitable.
“The increased crude oil prices have already provided the Treasury with unexpected additional revenue from the North Sea,” she said.
“These high crude prices have also increased prices of gas oil to end users, to the point where it will affect the economy of rural communities.
“People are also making smaller orders because they can‘t afford to fill their tanks and our members are extremely worried that higher prices raise the credit risk from farmers.”