Taxi drivers consider quitting as they prepare to Rachel Reeves’ “painful” budget as fuel taxes could increase on Wednesday budget.

Fuel tax was frozen by the Conservatives between 2010 and 2022, then reduced by 5p to 52.95p per liter, where it remains.

The chancellor would have already been consider increasing fuel duty by up to 7p per liter as part of the Treasury’s plan to raise £40bn of public funds through tax rises and spending cuts. A contradictory report in The Times over the weekend quoted Treasury officials as saying that Reeves was not considering such a “toxic” move.

Industry figures and campaigners have warned the government that ending the 14-year interest rate freeze would, in the words of the AA, have a “devastating impact on the economy and the most vulnerable in society”. .

Taxi drivers who faced a tough time when fuel prices soared after Russia’s invasion of Ukraine in 2022 say any further hikes could spell doom, adding they may not be able to pass costs on to customers at a time when many people are struggling. with the the pressure of the cost of living.

They are not the only businesses urging the Government to reconsider the move, with the Road Haulage Association (RHA) previously warning the Government that a tax increase would be “bad for growth”.

Here, Yahoo News examines what different industries have said about the possible fuel tax increase.

Taxi drivers

Taxi drivers are also bracing for a big hit to their business, as the owner of a family taxi business tells us. the BBC his business may not survive if fuel taxes increase.

Lyn Davies, who runs Saron Taxis in Tycroes, near Ammanford, Carmarthenshire, told the TV station: “We will probably have to finish, or certainly reduce, remove cars from the fleet.”

He said his business spent around £1,000 a week on fuel and was “losing money” when the price of diesel peaked at 192p in summer 2022.

Davies added that the rates it can charge are set by the local council, meaning it cannot pass all its costs on to customers.

Talk to The greatest radio hitsSajid Akram, a taxi driver from Hackney Carriage in Bradford, said: “This business is no longer operating because of the fuel.”

The taxi driver said he was not sure if he could pass the costs on to passengers because “they won’t be able to afford it”, adding: “There is a lot of competition and there is no way to do it anyway.” “There’s practically no work.”

Car campaigner Quentin Willson said the Sun: “A 7p tax increase – if oil prices remain stable – would take petrol to 142p and diesel to 147p per litre, costing drivers £4 more per fill-up and £175 more per tank. year.

“Taxi operators are already saying this rise could cost them up to £1,000 a year in extra fuel.”

Farmers

In a letter to ReevesCountryside Alliance chief executive Tim Bonner warned that “the cost of petrol is a crucial issue facing rural communities”, who are already facing a “rural premium” due to longer journeys through the road and the reduction of public transport.

“The pressure on rural community finances remains and so we would say now is not the time to let the cuts slide,” he added.

He said cars are an “absolute lifeline” for people in rural communities, adding: “An increase in fuel taxes would be a major blow at a time when many rural populations are already struggling. »

It follows a warning from fuel distributor Craggs Energy to farmers who buy their fuel in bulk to stock up now to avoid a “painful” rise in costs after the Chancellor unveiled her Budget, the newspaper reports. Agriculture in the United Kingdom.

However, for off-road vehicles such as tractors, farmers can use red diesel, to which a reduced rate is applied. Its current average price is 73.03 pence per liter, according to the energy website. Boiler juicecompared to regular diesel prices of 139.71p per liter, according to the government.

Truck and coach drivers

Imploring Reeves to reconsider his decision, the Road Haulage Association said increasing fuel taxes “would be bad for growth and ultimately harm the economy”.

DURING said its own analysis showed that a 5p rise – let alone a 7p rise – “could reduce UK national income by £430 million each year over the next five years”.

He highlighted a recent report from the Center for Economics and Business Research, saying diesel prices in the UK are “already higher than in any EU member state”, adding that the cost of the fuel represents 31 to 36% of operating costs in many countries. companies in the road transport sector.

“We are clear that at a time of higher operating costs and lower profit margins – with record numbers of insolvencies, many businesses would simply not be able to sustain such additional expenses,” adds the ORS.

At a recent session of the Welsh Parliament, Michael Gough, RHA board director for Wales, said an increase in fuel duty “would only accelerate business failures “. Financial news reports.

Freight and logistics

In a similar vein, Logistics UK, a group representing the road, rail, maritime and airline industries, as well as buyers of freight services such as retailers and manufacturers, warns that an increase in fuel taxes “would harm growth”.

“Fuel is the biggest expense logistics companies face,” Logistics UK policy director Kevin Green said in August as Reeves undertook a comprehensive review of public finances.

“With the sector already operating on extremely narrow margins – often just 2.5% – increasing fuel taxes would increase cost pressure on operators.”

Green warned that this could end up hampering the sector’s efforts to move towards a decarbonized future, with no cash available to implement the necessary measures.

“An increase in fuel tax would be a double whammy for millions of motorists, who would pay more for their journeys and more for everyday goods, as the logistics sector would have little choice but to pass on increased fuel costs to consumers,” he added.

“Our industry underpins all sectors of the economy and as such is ideally placed to help the government revive growth, but this cannot happen if the sector is under such significant pressure on costs.”

Caregivers

In September, the AA called for a continuation of the fuel duty freeze, warning that the voluntary care sector was “losing essential private drivers every day” amid volatile fuel prices.

Although organizations can reimburse volunteers for tax-free mileage allowances, the AA says these allowances “do not already cover current costs” and an increase in fuel taxes will only make the situation worse .

Katie Thorogood, co-owner of Love Life Care in Ely, Cambridgeshire, said the BBC it may have to cut staff and reduce services if fuel taxes rise.

She told the broadcaster: “For a small care business like ours, the cost of fuel already has an impact. If fuel taxes increase, we will have to increase our rates, which will impact our customers.

“This could deter people from wanting to work in the care sector, (which) is already experiencing recruitment difficulties. We may also have to reduce the areas we cover.”

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