The Government should take the opportunity of the Budget to scrap the planned increase in fuel duty.
The Federation of Small Businesses (FSB) has claimed that hike in fuel duty could affect as many as eight in 10 small firms.
Interim results from more than 1,000 respondents to the FSB ‘Voice of Small Business’ survey panel showed that rises in fuel duty will have an adverse impact on 79 per cent of small businesses.
Previous research by the FSB suggested that the hike in fuel duty will cost small firms up to £2,000 over the next six months, on top of regular outgoings.
As a result, the FSB is calling on the Government to reverse the planned 1 pence rise in fuel duty the Budget next week and is arguing for the introduction of a fuel duty stabiliser, a mechanism that will balance future increases in fuel tax with rises in the price of oil.
The cost of fuel has been compounded by the recent rise in VAT to 20 per cent, the FSB continued. But while a cut in fuel VAT would lower the price at the pump, it would not, however, stem the volatility in fuel prices, something a fuel duty stabiliser would achieve, the FSB said.
Introducing a fuel duty stabiliser would provide greater certainty for businesses by allowing them to factor in fuel costs as they plan for the future. The FSB believes that the cost of doing nothing to alleviate pressures of high fuel prices on small firms will vastly outweigh the cost of implementing a fuel duty stabiliser in the short-term.
John Walker, the FSB’s national chairman, commented: “We all know that the rises in fuel are having a huge impact on everyone across the country, not least of all small businesses.
“Reversing the planned 1 pence rise – which when indexed to inflation will actually mean a 5 pence increase on pump price – and cutting the VAT on fuel duty in the Budget next week will be welcome steps But to really stem these volatile prices the Government must introduce a fuel duty stabiliser as it promised. Small firms are under huge pressures – stabilising fuel prices will be a step in the right direction to really help small businesses in all sectors grow.”