The average household will be paying nearly £40,000 in fuel duty over a lifetime if a planned hike in the charge goes ahead, campaigners have said.
Calling for Chancellor Rachel Reeves to scrap the rise, the TaxPayers’ Alliance said it hit the poorest families the hardest.
Duty was cut by five pence in 2022 in response to the Ukraine invasion. The cut has been kept in place ever since but is due to be reintroduced in September, rising back to the full five pence by March.
It would be the first rise in fuel duty for 16 years. The Government has come under increasing pressure to keep it in place after the war in Iran caused oil prices to soar.
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Petrol and diesel have already gone up at the pumps.
The TaxPayers’ Alliance said that over a lifetime – based on 45 years of working and 15 in retirement – the average household currently spends £36,285 on duty and related charges.
The hike, taking duty to 58p a litre, would see this increase by £3,400 over the same period, making a lifetime spend of £39,708 in today’s money.
Of this, £31,304 would be paid directly at the pumps with the remaining £8,404 made up of higher costs on “intermediate goods and services”, such as delivery costs and taxi fares.
The average household will have a lifetime spend of £39,708 if the planned hike in the charge goes ahead
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The TPA points out the poorest ten per cent of families spend a greater proportion of their earnings on duty, with £508 a year currently going on the tax – or 2.7 per cent of their incomes.
This compares to 0.44 per cent spent by wealthier motorists.
Retired households are also hit hard, with research showing that in 2022/23, the latest available dataset, they spent 1.3 per cent of their gross income on duty.
This compares to 0.9 per cent for working households. TPA Researcher Anne Strickland said: “Taxpayers are rightly alarmed at the looming fuel duty hike, given the already sky-high prices they pay at the pump.
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'If the Chancellor refuses to stop this increase, the higher bills hitting taxpayers across the country will rest squarely on her shoulders,' the TPA warned
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“Households are already handing over tens of thousands of pounds in fuel duty over their lifetime, and pushing ahead with another hike would make an already punishing tax burden even worse, particularly for retirees and those on low incomes.
“If the Chancellor refuses to stop this increase, the higher bills hitting taxpayers across the country will rest squarely on her shoulders.”
While the Government’s stated position is that the rise will go ahead as planned, ministers have suggested this is “under review”.
And Energy Secretary Ed Miliband pledged at the weekend that the Government would do “whatever it takes” to help Britons through the current price shocks.
Asked whether plans to end the duty freeze would be reversed because of spiking oil prices, he said: “Let me answer that by saying this, which is, I’ll be candid with you, we don’t know how long this conflict is going to go on and therefore, with five months to go until September, we will have to see where we are, obviously.”
He referred to the Chancellor’s actions to reduce energy bills and promised: “We will stand by the British people in this crisis, and we’ll do what it takes to do that.”