Daniel Lyons, indirect tax partner at Deloitte, the business advisory firm, comments on today's Budget announcement to cut fuel duty by 1 pence per litre:
"Whilst it is welcomed that soaring fuel prices have been acknowledged in today's Budget, the decision to cut fuel duty by 1 pence per litre is not a massive giveaway as the reduction in rate is in effect only temporary. Taking George Osborne's Ford Focus, under previous Labour proposals a full tank would have cost £72.26, but from 6 p.m. tonight that cost will drop to £69.72. However, assuming stable oil prices, the cost from 1 January 2012 will increase, with inflation, to £71.62.
"The coalition government are introducing a fuel-duty stabiliser, which means that fuel duty will only increase with inflation, unless oil prices fall below $75 per barrel, in which case, an extra 1 pence of fuel duty will be levied. However, the Chancellor has reserved himself some considerable discretion to adjust the fuel duty if the price of oil falls to a level which is still above £75 per barrel."
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