Fleet News

Government must wean itself off taxation, warns The Fuelcard Company

The recent Brent crude oil price jump to $119 a barrel, following OPEC’s hold on production has left no doubt that any benefits derived by UK fleets from the fair fuel stabiliser have disappeared, The Fuelcard Company has warned.

And with other economic and political factors at play, the fuel card reseller says it is also clear there will be no return to low-cost fuel. Among drivers is the disruption the Arab Spring has brought to oil producing countries; the adverse influence of commodities speculation on prices; and the latest statistics from BP revealing that consumption rose last year at its fastest rate since 2004.

Accepting that a British administration can only exert modest influence on such international dynamics, The Fuelcard Company is calling on the government to tackle the problem with tools it does have – and lower fuel taxes for commercial drivers to a point that gives our freight industry parity with those across Europe.

According to sales and marketing director, Jakes de Kock, action is needed urgently to remove the disproportionate tax burden that has been placed on the domestic supply chain.

“The current UK diesel price, £137.9p (€1.62) a litre, is the second highest in Europe, with only Norwegians paying more at €1.64. The lowest is just €1.15, while €1.37 is the average. We pay so much because the 59 per cent taxation on each purchase is higher than most Euro countries; today’s pump price includes 57.95p fuel duty and VAT of 22.98p.

“Successive governments have derived enormous revenues from fuel taxation, but we are in danger of killing the golden goose. Not only are fleets going out of business or having to turn down work because it offers no margin, they are seeing European competitors arriving in the country with full tanks of cheap fuel to take their place.

“All this means that we are endangering the supply of foodstuffs, other vital goods and the consumables we take for granted – or, at the very least, surrendering its control to foreign companies.”

Recent research by Halfords and Admiral has shown that private motorists are reducing car use in response to rising pump prices, but this is not an option commercial drivers can take without damaging their business and customer service. Hardest hit are smaller hauliers, although the entire sector is suffering.

“The Chancellor of the Exchequer promised a workable solution to stabilise the price of fuel in his April Budget,” said RHA chief executive Geoff Dunning. “We MUST see this implemented as a matter of extreme urgency because for many, time is running out.”

The plight of lorry drivers could in fact be worsened soon, with the European Parliament’s decision to hike pollution charges for HGV vehicles. Under the terms of the ruling, EU member states can elect to penalise freight companies for truck noise and emissions.

The RHA has suggested that the environmental legislation alone could add 2p a mile to hauliers and is also concerned that money from the charges will be lost in administration or passed to other sectors, rather than reinvested into the road network. And far from being confined to the freight industry, the impact is an all pervading one.

“The price of fuel doesn’t just hit British hauliers; it also hurts UK competitiveness and raises the price of everything we buy in the shops. As fuel costs have risen, the price of everyday goods has increased too. Fresh food could become scarce and many jobs could be lost as the UK grinds to a total standstill,” de Kock continued.

“To avoid this prospect, the government must be bold and imaginative; bold in lowering its reliance on an immense revenue stream – albeit one that is choking the country – and imaginative enough to find a replacement source of income that doesn’t hurt people or businesses.”

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