RHA asks Chancellor to vary duty on petrol and diesel

The Road Haulage Association has called on the Chancellor to vary the duty level on diesel and petrol to ensure that the pump price of the two fuels remain roughly the same – as has been the accepted price position of the two fuels for years.

Even in mid-2007, diesel was typically just 2p or 3p more expensive that petrol. But over the past year the price of diesel fuel has risen much faster than the price of petrol, opening up a gap of up to 15p. This has been due to market demand and the failure of the UK to invest in diesel refining capacity and the indications are that the price difference will be maintained for the foreseeable future.

Diesel is the key fuel of UK business, with the price road haulage companies pay going straight into the price people pay for goods and for food in the shops. Diesel cars also accounted for more than 40% of the all the cars sold in the UK and give significantly better mpg than petrol cars; they therefore have a smaller “carbon footprint”.

“It makes sense to ensure that diesel users are not penalised compared with petrol users," said RHA Chief Executive Roger King. "As diesel and petrol sales volumes in the UK are roughly the same, a 5p a litre reduction in diesel duty could be off-set by a 5p a litre increase in petrol duty; in the current market that would simply restore the price position of the two fuels to the well-established position of a year ago.

“The reduction would also go some way to closing the fuel duty gap between British trucks and those fuelled elsewhere in the EU, including Ireland, where duty levels are half that of the UK. The all-party transport committee says the duty difference is ‘patently unfair’ (Freight Report, para 116) and Lib Dem Treasury spokesman Vince Cable has noted that it is doing great damage to the British road haulage industry” (fuel duty debate, July 16 2008).

“We believe that we have won the argument in respect of UK/EU fuel duty levels for hauliers; and using the duty level to restore the intended balance between petrol and diesel prices is a practical way of giving British hauliers a more level playing field on which to compete.

“It is important to remember that diesel duty paid for trucks is a tax on British business – and a heavy one at that, making British industry less competitive.

“Diesel and petrol users should share the pain of high oil prices equally,” concluded Mr King.