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Rural communities will be hit by petrol tax hike

PUBLISHED: 12:00 01 September 2009 | UPDATED: 11:48 06 July 2010

Just when you thought things were starting to get better, up goes fuel duty, leaving drivers forking out another 2p a litre from today.

A snap EDP survey yesterday revealed unleaded petrol cost between 101.

Just when you thought things were starting to get better, up goes fuel duty, leaving drivers forking out another 2p a litre from today.

A snap EDP survey yesterday revealed unleaded petrol cost between 101.9p and 107.9p a litre at filling stations across the region, with some charging up to 111.2p a litre for diesel.

What it will cost today will depend on how much of the hike, and how quickly, retailers pass on to the motorist.

However, the findings do reveal that already prices can vary by several pence in the same town, or within a few miles, though supermarkets tend to be slightly cheaper than independents.

Norwich drivers have the cheapest fuel, with both petrol and diesel yesterday costing 101.9p a litre at Asda, in Drayton Road. It's a different story on the A47 at the start of the Acle straight, where those driving diesel cars could pay 111.2 a litre for a fill-up.

Motoring organisations say with VAT and rising wholesale fuel costs added on, the increase is likely to be nearer 5p a litre.

That means the average family spending another £120 a year on petrol, while a series of increases over the last year have seen bills go up by £600.

Fuel prices have risen by 25p a litre since the start of 2009, when they averaged 85p a litre. That's an increase of 23pc, or around £11 a tank full. Another rise is due in April, while VAT is due to go back to 17.5pc in January.

Adrian Tink, from the RAC, said: “It could be a very long winter for motorists. This third fuel-duty hike is unacceptable.

“The chancellor seems to regard Britain's 30 million motorists as a soft target for tax and with this latest rise he risks alienating them even further.

“The government needs to appreciate the impact such taxes have on cash-strapped families and, at the very least, provide people with some clarity over where this money is being spent.”

Gordon Brown's government argues money is needed to help fund public investment. Investment in what? That is a good question. Will King's Lynn see the new college it desperately needs to up-skill its workforce and kick-start its economy? Will they dual the A11? Will our boys fighting in Afghanistan get the armoured vehicles and helicopters they need?

The suspicion is: no. The money - estimated at £1.2m a day - goes into a central government pot, to make good for shortfalls elsewhere.

It's easy to blame Mr Brown, who last year urged petrol retailers to cut prices before famously breaking his promise not to increase taxes. But the Tories have not yet let us know their plans for easing the economic pain.

It also has to be noted that it was the Conservative party which brought in the new system of calculating fuel duty in 1993, when the so-called escalator pegged increases 3pc above the rate of inflation.

In 1996, with John Major's Tory government still in power, duty was 42.9p, while petrol averaged 55.8p a litre. As prices soar towards £1.10 a litre today, the government's tax grab is 65pc of what you pay at the pump - just under 70p.

As the Blair years began, government saw taxes as a way to make us change our behaviour and be kinder to the environment.

In much the same way as increasing the price of cigarettes cuts the number of smokers and increasing the price of beer makes us drink less of it, our betters argued higher fuel costs would mean fewer emissions.

A sizeable lobby agrees, with some arguing the extra tax take should be spent on improving public transport.

But is the gain worth the pain at a time when most families are already spending nearly as much feeding the car as they do feeding the kids? Making them make cutbacks elsewhere is hardly the way to nurture the green shoots of recovery.

The irony is, there's no escape from the fuel tax pain, even if you don't drive.

Everything we eat, wear or consume needs to be moved from one place to another. Higher fuel prices mean higher distribution costs, meaning more expensive food, clothes and household goods.

Norfolk's going to feel the pinch in every pocket. Rural communities are going to get it worst. A car is an essential if you live in a village without a doctor, chemist, shop or school.

And, to add insult to injury, petrol often costs more in rural areas.

Farmers who are involved in tough negotiations with British Sugar over this year's beet price regime will find that the cost of trucking their crop from the field to Wissington or Cantley eats another chunk out of their profits.

But while hauliers will simply pass higher fuel prices on to their customers, Jo Tanner, of the Freight Transport Association, said many of them were at breaking point.

“The chancellor can provide a real lifeline if he stops this rise - the third since last December - from going ahead,” she said.

“With oil prices already rising and many businesses on their knees as a result of the recession, is this really the best time to be increasing fuel duty, again?”

Richard Baron, head of taxation at the Institute of Directors, said: “Putting up taxes is never going to help an economy, especially when the government is also trying to stabilise the situation and put us on track for recovery.”

Morrisons last night pledged to freeze prices for nearly a week until September 6, claiming it was taking the lead in delivering “the strongest value for all our customers”. Sainsbury's said it already offered the cheapest petrol, with local figures in Norfolk supporting that.

Asda claimed few would benefit from Morrisons' freeze as most would already have filled their tanks before the bank holiday.

“We don't do stunts,” a spokesman said. “Our prices reflect our costs and we can offer our customers low prices every day, including pre-bank holiday when sales are at their peak.”

However, with rising energy prices being a factor in pushing up inflation in recent years, the increase in the price of crude - from $40 a barrel in January to just over $70 a barrel today - combined with the increase in fuel duty, has the potential to slow any economic recovery and further hit rural communities.

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