Tax double whammy hits UK logistics industry with £500m bill

The Chancellor’s tax double whammy could land the logistics industry with a bill of more than £500 million, according to figures from the Freight Transport Association (FTA). Consecutive rises in fuel duty, the first taking place tomorrow (1 December 2008) and the second just four months later, will hit commercial vehicle operators hard, at a time when the industry is already struggling.

Furthermore, the VAT reduction, which was announced by Alistair Darling as a way of kick-starting the economy, will be worthless to the transport sector because businesses can already claim back VAT on fuel purchases.

James Hookham, FTA’s Director of Policy, said: “This is an absolute betrayal of the logistics industry. The Chancellor said he wanted to give the economy a shot in the arm: what we’ve got is a kick in the teeth.

“For many firms, the extra tax bill is equivalent to several drivers’ wages. Taken in the context of a shrinking economy and fewer goods being moved around, this could mean significant redundancies across the logistics industry. The Chancellor will have those job losses on his conscience unless he acts to reverse this disastrous decision.”

FTA has written to the Prime Minister demanding a meeting to discuss the potential crisis within the logistics sector. It will call for immediate action from the Treasury either to reverse the decision, or to look at more intelligent options for commercial vehicles. The Association has long been calling on the Government to introduce a lower level of fuel duty on diesel for commercial vehicles. With the reality of the Chancellor’s announcement now about to bite, that call has become even more desperate.
Mr Hookham added: “The UK relies on the logistics industry to keep the economy moving and we already more than pay our way, putting £7.8 billion into the Treasury coffers each year. We are not asking for a handout from the Government: we are simply asking them to aid the survival of the industry, and the thousands of people working within it. If he can do it for the Scottish whisky industry, surely he can do it for one which employs around 249 times as many people?”

Without the concessions FTA is looking for, there are fears not only for a costly Christmas this year, but a cancellation of the festive season in 2009 too.