Will The 3p Rise In Petrol Tax Be Withdrawn In The Budget

Have you noticed how petrol and diesel prices have be soaring recently? There is another 3p per litre increase due on April 1st, but will this be withdrawn in the budget tomorrow?

Just in case you’ve not noticed, there is a budget tomorrow (Wednesday) and one of the hottest items being debated in Internet chat rooms and in the press is will Alistair Darling stick to his guns and postpone 3p per litre rise in fuel duty that was promised in the last budget.

Diesel is now costing £1.13 per litre at the local supermarket and I’ve seen it being sold for £1.16 in some garages. Oil is currently $81 per barrel and seems very reluctant to fall, particularly with this news that existing oil stocks have probably been overestimated, so oil prices are hardly likely to fall much in the future.

So adding an additional 3p per litre to petrol and diesel will take prices very close to the psychologically significant price of £1.20 per litre. In fact by Easter these fuels could cost more than £1.20 if oil prices keep rising and, significantly, Sterling keeps falling against the dollar.

So far Alistair Darling seems to be winning the battle to withdraw the oil tax rise in the budget, presumably on the grounds that it would be damaging politically to incur such a large rise in petrol prices so near a general election.

It would feed directly through to increased inflation, just as inflation seems to be falling, and increase costs for everybody, including the businesses we so need to nurture to sustain economic recovery.

We’ll see what happens tomorrow. By the way, I’ll be getting a ringside seat for the budget as I will be commentating on it for ITN tomorrow.

Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.