RAC warns of 50% rise in fuel duty
The RAC Foundation has announced its predictions based on an investigation and report into the future of motoring tax. The breakdown cover provider's charity has said that fuel duty collected by the Exchequer currently accounts for 1.7% of gross domestic product, or GDP, but this could drop to 1.1% by 2029.
Furthermore, vehicle excise duty is expected to drop significantly over the same period, falling from 0.4% of GDP to 0.1%.
The two drops together could amount to £13 billion lost.
RAC Foundation director Professor Stephen Glaister said: “As drivers endure record prices at the pumps they might be surprised to learn that future governments face a drought in motoring tax income.”
“The irony is that while ministers encourage us to buy greener, leaner cars, they are being forced to look at ways of clawing back the money motorists think they will be saving. This isn't scaremongering. The Treasury has already announced a review of VED bands to ensure drivers make a fair contribution to the public finances even as cars become more fuel-efficient."
An option for future Chancellors would be to raise fuel duty, but covering £13 billion would require an increase of 50%, which would be greeted with great dismay by UK drivers.