The Government looks likely to give serious consideration to the introduction of a fuel duty stabiliser.
The escalation of petrol pump prices has prompted the Government to look at the practicalities of implementing a system that would allow fuel duty to fall if oil costs rise significantly.
The idea is that, as global oil prices increase, the tax take is reduced, and, as global prices drop, the tax take is increased.
But to render the system workable for both businesses and the Treasury, it will need some form of capping.
The Prime Minister, Mr Cameron said: “I know how difficult it is for motorists, and particularly for small businesses and families, when they are filling up at the pumps and paying more than £1.30 a litre.
“As we have said, we will look at the fact that extra revenue comes to the Treasury when there is a higher oil price, and see if we can share some of the benefit of that with the motorist.”
Given the pressures on fuel prices, it is thought the Chancellor may possibly use the Budget to scrap the planned rise in fuel duty this April.
Fuel duty climbed to 59.85p a litre on 1 January, and average UK petrol and diesel prices rose more than 2p a litre following the VAT increase to 20 per cent on 4 January. Tax now accounts for almost two-thirds (63 per cent) of pump prices.
