It’s Budget time and as you might expect, industry organisations are gearing up to drive home the message: no increase in fuel taxes. There has been speculation that chancellor George Osborne will use the Budget on 16th March to raise the duty. This seems to be based on the fact that the government is exceeding its borrowing targets and needs some quick wins to get back on course.
It is estimated that raising fuel tax in line with inflation would raise an extra £3 billion a year.
The Freight Transport Association has made it clear that it regards any increase in fuel duty as “economically irresponsible”. James Hookham, deputy chief executive, said: “Regardless of the price of oil, for every penny fuel duty goes up it costs truck and van operators around a £100 million in a full year. It won’t make them drive any less – goods still need to move to where they are needed – and it won’t help them invest in making their vehicles and drivers even more efficient. It will just cost them a lot of money.”
But, it would be no surprise to find that George Osborne is looking at the fall in pump prices and thinking he can get away with a tax rise. With the oil price down to about $30 a barrel, it means that the pump price of diesel is now averaging £1 a litre. That compares to £1.50 a litre four years ago.
Fuel taxes might be top of the agenda but there is also concern over the impact that business rates are having on supply chains. This is a particularly significant tax for bricks and mortar retailers – and consequently the supply chains that support them.
Last month Justin King, former chief of Sainsbury’s, took the lead in arguing that, for retailers in particular, business rates are a massive problem – certainly bigger than the Corporation Tax row that has been going on. In particular, he highlighted the fact that high street chains are paying many times as much in business rates as online-only retailers.
The British Retail Consortium has called for a fundamental reform of business rates. BRC chief Helen Dickinson responded to the suggestion that Sunday trading might be extended by saying: “The government should be concentrating its efforts on finally delivering fundamental reform of the business rates system which would provide much greater support to the reinvention of high streets across the country and particularly in areas which are struggling.” The Confederation of British Industry has now called for a shift in the uprating system from the Retail Prices Index to the Consumer Prices Index. It believes this will save money.
It is clear that the chancellor’s decisions on these issues could have a big impact – not only on logistics costs, but also the way supply chains are structured. It’s time to make your voice heard.