Postpone the fuel duty rise to help families and struggling economy – my Politics Home article

Britain is finally out of the longest double-dip recession since the Second World War. But this is no time for complacency. A strong economic recovery is far from secured. And families, pensioners and businesses are still feeling the squeeze. Prices are rising faster than wages and families are being hit hard by the government’s VAT hike, cuts to tax credits and child benefit.

At a time when the cost of living is rising, our recovery is fragile and this out of touch government is giving 8,000 millionaires a tax cut, it cannot be right to hit middle and low income families and small businesses with another tax increase.

That is why Labour is calling on the Chancellor to cancel January’s planned 3p rise in fuel duty – at least until next April. We will put this to a vote in Parliament on Monday and I hope MPs from all parties will stand up for their constituents and back our call.

Where should the government get the money to pay for this tax cut? I suggest they pay for this move by clamping down on tax avoidance. For example, there is a growing problem with some employment agencies forcing workers to become employees of an umbrella company. They then falsely inflate the worker’s travel and food expense claims, reducing tax and national insurance, and pocket the avoided tax as profits.

HM Revenue and Customs has forecast that these schemes cost the exchequer £650m a year. Recent estimates have now put it as high as £1 billion a year. But Ministers have failed to take tough action to stop it happening. Even if only a proportion of that money was recouped it could pay for the fuel duty rise to be put off until next Spring.

Acting now would give some relief to millions of motorists. Petrol now costs an average of £1.36 per litre. That’s 5p higher than in the summer when George Osborne u-turned and agreed to Labour’s call to postpone August’s fuel duty rise. And it’s 15p higher than it was at the general election.

It’s good news that some of the big supermarkets have this week cut their pump prices to attract shoppers in the run up to Christmas. But rather than give the retailers a reason to put prices back up in the New Year, Ministers should keep the pressure on them to keep it down by postponing the duty rise in January.

Of course difficult decisions are needed to get the deficit down. That’s why Labour put up fuel duty in the past. But we often delayed or cancelled planned duty rises based on the circumstances at the time – including at the height of the global financial crisis. And I am clear that now is not the right time to hit the economy with another tax rise on small firms and people on low and middle incomes.

The government needs to act and clamp down on those avoiding paying their fair share of tax so that millions don’t have to pay more. And I hope MPs from other parties will join us next week in pushing them to do so.

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Posted November 9th, 2012 by Ed