FSB calls for Chancellor to share oil tax windfall

The Federation of Small Businesses is calling for the Chancellor to share the tax proceeds of higher than predicted North Sea oil prices with hard-pressed, consumers, motorists and small business owners.

The UK’s biggest business organisation has been working with accountants Grant Thornton to calculate the extra tax revenue the Government has received because of increases in oil prices over and above predictions made in the 2008 Budget.

The FSB is calling for the planned 2p per litre fuel duty increase to be scrapped and an automatic adjustor mechanism, whereby extra tax revenues from higher than predicted oil prices would automatically trigger corresponding reductions in fuel duty. The Treasury’s 2008 Budget forecast assumed an oil price of $84 per barrel (pb).

According to Maurice Fitzpatrick, a tax expert at Grant Thornton:

• For every $4pb by which oil exceeds the predicted price the Treasury receives an extra £1.5 million per day;
• Deferring the planned 2p per litre fuel increase for six months would cost £550 million, but in just 50 days since the Budget on March 12 2008 the oil price averaged $108pb, giving the Treasury £450 million more in revenue than it forecast;
• The oil price is widely predicted to remain over $100pb, giving the Chancellor plenty of extra money to pass on to motorists.

John Wright, FSB National Chairman, said:

“High fuel prices are crippling small business owners in every sector and in every area of the country. Those small businesses produce over half of UK GDP and employ over 13 million people. Apart from the immediate extra costs to motorists of filling up at the pumps, spiralling petrol prices also have a knock-on effect on everybody in terms of more expensive food and consumer goods.

“The Government can do something about the situation. A mechanism which automatically uses extra oil tax revenue to reduce fuel taxes would be an efficient, effective and fair way of delivering some relief to motorists of all kinds.

“Spiralling fuel prices are having a major impact on the whole of the UK economy, of which small businesses are a significant part. The money is there to help them. The question is whether the Government will act.”

ENDS

Notes to Editors:

1. The FSB is Britain’s biggest business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

2. Grant Thornton is a leading accountancy and professional services firm. More information is available at www.grant-thornton.co.uk.

Contacts:

Federation of Small Businesses:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Simon Briault: 020 7592 8128 / 07917 628998

For regional FSB contacts please go to www.fsb.org.uk/regions

Grant Thornton:

Michael Burgess: 020 7728 2758