An SNP MP has urged Rishi Sunak to introduce a regulator for fuel taxes as the costs of a tank of petrol reach record highs.
Alyn Smith, SNP MP for Stirling, wrote to the Chancellor today asking him to consider appointing a watchdog, warning the situation ‘will not stabilize in the short to medium term’.
It comes as fuel prices hit an all-time high, with a liter of petrol costing 163.5p, while diesel was 173.4p a liter yesterday.
A month ago pump prices were 148p per liter of petrol and 151.6p per liter of diesel.
In his letter, Mr Smith suggested using the additional VAT resulting from soaring fuel prices to reduce fuel taxes, which would allow sellers to pass the savings on to consumers.
However, the Treasury insisted there had been no ‘gain’ in VAT revenue and fuel duty had already been frozen, which they say saves drivers £15 each time they fill up.
Mr Smith wrote: “Families and key sectors like transport, transportation and soon the construction industry are suffering from forecourt costs.
“These costs are unaffordable for many and in a rural constituency like mine cars and public transport are essential to people’s daily lives.
“In addition, it has a huge effect on the cost of distributing goods.”
Mr Smith said the fuel tax cut would “help ease some of the pressure from the cost of living crisis and also reassure voters and businesses that the government is taking concrete action to address these problems”.
The MP said: ‘Our economy has been battered by the 2008 financial crisis, 10 years of Tory austerity, Brexit, the Covid-19 pandemic, and now a cost of living crisis as inflation soars and the cost of basic necessities is skyrocketing.
“In addition to increases in National Insurance contributions, changes to student loan repayments and cuts in benefits, we really need to challenge this UK government’s hold on the grassroots.
“Russia’s invasion of Ukraine will only exacerbate these tensions, but it is by no means the only cause.
“Years of macroeconomic mismanagement by Westminster have left us in a much more vulnerable state to begin to respond to this ongoing crisis.”
He added: “I call on the UK Chancellor to urgently get the situation under control and to use his forthcoming spring budget report to roll out much-needed aid to Stirling households.
“A fuel duty regulator is an important step to address the dysfunction present in the UK market, while the one-off VAT from fuel duty should be rolled out quickly to ease the pressure households are facing.”
A UK Treasury spokesman said: ‘There has been no ‘exceptional VAT gain’ and revenue this year is expected to be £2billion lower than the amount collected just before the pandemic.
“To cut costs, fuel taxes have been frozen for the twelfth consecutive year, which will save drivers around £15 every time they fill up compared to pre-2010 plans.
“We’re providing around £21billion this financial year and next to help families, which also includes cutting the Universal Credit Tapering Rate, freezing alcohol duty and helping households with their utility bills. energy through our £9.1 billion energy bill rebate.”