The chancellor has promised a cash freeze in all road-fuel and other oil duties together with reforms in the haulage industry in a bid to stave off a second round of winter fuel protests.
The freeze in excise duty is set to last until April 2002 will continue for a further year if the price of oil remains as high as now, said Brown. The price of crude oil has risen from $11 to $31 with no signs of dropping.
The duty freeze means a cut for hauliers by the equivalent of 8p per litre in the price of diesel and for motorists by 4p per litre in the price of petrol to be implemented in 2001, the chancellor said.
The fuel freeze will come at a cost of £560m to government at the rate of an increase of 1.5p per litre, according to governmental calculations.
Brown also pledged a cut in excise duty on Ultra-Low sulphur fuel by a further 2p for petrol and 3p for diesel per litre.
‘A better deal for drivers and cleaner air across Britain,’ Brown declared.
Deputy prime minister, John Prescott, said: ‘This is a good deal for everyone. We’ve had to make some tough choices balancing demands to help the transport industry with a need to protect the environment and to help our towns and cities.’p>He also promised cuts in vehicle excise duty for lorries by over 50% at a cost of £300m a year and will abolish vehicle tax on tractors and other agricultural vehicles.
The haulage industry’s prays were partly answered in this Pre-Budget report. Brown estimated that the average annual saving for hauliers would be £750 with ‘environmental incentives build in’.
Brown mooted a ‘Britdisk’ for British hauliers using UK roads giving them the edge over foreign hauliers who enjoy lower fuel rates and licence taxes.
Keith Anderson, tax partner at KPMG, said: ‘A lot of what he announced was expected in terms of reduced rates and freeze on fuel duty. What wasn’t there was encouragement or tax incentives for gas-fuelled cars.
‘As far as the haulage industry is concerned, he’s gone mid-way on the demands. It’ll be interesting to see how the fuel lobby react to this.’
‘The savings he announced may be taken away if prices of oil increase,’ warned Anderson.p>