Small and medium businesses are urging the Chancellor to scrap the planned fuel tax increase in the upcoming Spring Budget. Jeremy Hunt is facing increased pressure from SMEs to ditch the hike in fuel tax as he is due to deliver the budget on 15 March. Fuel tax is due to increase by 23%, 12p a litre, in April, and this could have a detrimental impact to small firms in both rural and urban areas, research shows.
The Federation of Small Businesses (FSB) found that 89% of firms reported an increase in the cost of running their business this year – and 61% of rural businesses cite fuel costs as one of the main drivers, while this drops to 51% for city-based firms. Rural-based firms are at a higher risk of potentially needing to downsize, close or radically change their business model (18%) compared with 12% in urban areas.
This fuel duty hike could intensify the cost-of-living crisis, with road users set to collectively face an extra £5.7billion in taxes. FSB National Chair Martin McTague said: “The Chancellor didn’t mention this fuel tax bombshell in his Autumn Statement, with the Government instead slipping it out in weighty official documents afterwards.
“If fuel duty rises as planned, it would represent a missed opportunity to remove one of the obstacles that will hinder growth – but the Chancellor still has the power to rectify that mistake in next month’s Spring Statement.
“Small firms are already struggling with a cost of doing business crisis, led by rampant inflation and high energy bills. This is the worst possible time to pile on extra taxes.FSB is particularly concerned about the impact this will have on rural small firms – for instance, a cosy coffee shop in the southwest that relies on customers driving there if petrol becomes more expensive. Firms that rely on cars and vans for petrol, such as delivery services, tradespeople and farmers, would also bear the weight of the impact.
“The Government must support the small businesses that form the backbone of our rural economy. But now, many of these businesses face the harsh reality of downsizing, closing or changing their business models.”