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Fuel tax increase ups the cost of petrol

The deferred increase in fuel duty has finally reached the petrol pumps.

Faced with soaring leaps in the cost of oil last year, the Chancellor decided twice to delay the introduction of the increase in fuel tax first announced in the 2008 Budget.

But with world oil prices falling due to lack of demand, the increase has now been implemented as of 1 April, adding 2.12p to the cost of a litre of petrol and diesel.

Business and motoring organisations criticised the move.

The AA claimed that a family with two cars, each using an average of 1,286 litres per year, would see an annual tax increase of £54.53.

Edmund King, president of the AA, said: “It’s a shame that this and other fuel tax increases will severely dent consumer spending and undermine the UK’s economic recovery.

“Taking an extra £1 off drivers each time they fill up their fuel tank is a £1 taken away from High Street and leisure spending that would help revive the economy.”

Theo de Pencier, chief executive of the Freight Transport Association (FTA), warned there could be further rises on the way.

He said: “The government has another bite of the cherry on 22 April. At a time when jobless figures are already sky-rocketing, the government needs to understand that such actions will only add to them.”

Phil Orford, chief executive of the Forum of Private Business (FPB), added: “There is no justifiable reason to raise duty on fuel further. The government should freeze additional fuel duty increases in 2010 to help protect small businesses and jobs.”

However, the Treasury responded by arguing that oil prices are far lower now compared with the peaks seen last year and that there have been significant reductions in the price of fuel at the pumps over recent months.

A Treasury spokesman said: “November’s Pre-Budget Report set out changes to fuel duty in line with the government’s long-term policy of reducing emissions and financing world-class public services, and, in real terms, fuel duty in the UK still remains lower today than it was a decade ago.”