If you don't believe in the Laffer curve, just have a look at petrol taxes. Figures published by the AA show that the Treasury is now losing money because of soaring fuel duty. The Government actually collected £637 million LESS in fuel taxes than in the same period 3 years ago, despite record levels of fuel tax.
But it gets worse. As I set out in a backbench debate on petrol prices recently, many motorists across the country now spend a tenth of their income just filling up the family car. Petrol now costs a King’s ransom, and the extortionate cost is causing enormous hardship for millions of families.
In the 2011 Budget, George Osborne finally put the brakes on Gordon Brown’s remorseless tax plans: scrapping Labour’s tax escalator, cutting fuel duty by 1p, and delaying the inflationary tax hikes to 2012. The Prime Minister also gave an encouraging answer, recently, when I asked him about this issue at PMQs.
Our letter asked the Prime Minister to scrap the planned rise in fuel duty, which is scheduled for January 2012, and could hike prices by up to 4 pence per litre.
Petrol taxes are now so astronomical, that we are at the point of diminishing returns. As the figures from the AA show, families and businesses now simply can't afford to keep their cars and vans on the road.
That’s why cutting petrol taxes is now absolutely vital – not just for the British economy, but to help tackle the deficit, too. The move would also be highly popular. A recent ComRes poll showed that the cost of filling the family car is at the very top of people’s priorities. Of the sample questioned by ComRes, 59% stated thata reduction in fuel prices would make the biggest difference to their life, with the next highest issue (changes to the NHS) scoring only 6%. What we need now is your support. So far we have over 170,000 signatures on the Fair Fuel UK petition, but we are aiming for one million, or more. I would urge everyone to sign up today.