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Call to drop fuel duty increases

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Planned rises in fuel duty should be scrapped, a business group has urged.

With fuel prices hitting record highs, the Forum of Private Business (FPB) has called on the government to reconsider its intention to introduce two further rises in fuel duty, saying the increases will harm business.

Fuel duty went up by 1 pence on 1 April. As announced in the Budget, the 3.76 pence hike in the duty is being staggered over the course of the year.

With the April rise already in place, another 1 pence will be added in October and 0.76 pence in January 2011.

But the FPB has argued that, with petrol up to 119.9 pence a litre and with forecasts of pump prices reaching 150 pence over the summer, the duty will dent the profitability of many smaller firms.

Matt Goodman, the FPB’s policy representative, said: “High fuel costs affect the entire economy. When prices at the pumps go up, nearly every business and consumer in the UK suffers. It’s probably no coincidence that the previous record high prices in the summer of 2008 were soon followed by full-blown recession.

“Following a prolonged period of decline, we are at the beginning of a crucial stage in the UK’s economic recovery. Small businesses will play a central role in this recovery and must be given a tax environment in which they can thrive. Spiralling fuel duty is jeopardising small business growth and the planned increases should be shelved.