George Osborne urged to freeze petrol tax

Taxpayers Alliance forecourt poster Cards displayed on forecourts highlight tax levels

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Pressure group the Taxpayers' Alliance has launched a campaign to highlight what it calls the "excessive" level of fuel tax paid by UK motorists.

The group has joined forces with the Petrol Retailers' Association, which represents independent petrol retailers, to put pressure on the government.

It wants Chancellor George Osborne to cut or freeze fuel duty until 2015.

A Treasury spokesperson insisted ministers had taken "real action to help motorists with the cost of fuel".

And the Treasury claimed seven other EU countries had higher prices at the pumps - something disputed by the Taxpayers' Alliance.

Cars 'essential'

Jonathan Isaby, political director of the Taxpayers' Alliance, accused the government of "fleecing" motorists and called for a freeze in fuel duty for the remainder of this Parliament.

"For most people in this country, a car is essential," he said.

The campaign will see 5,000 display cards placed at checkouts in petrol stations across the UK.

The cards claim that, out of every £30 spent at the pumps, £18 is paid in fuel duty and VAT, with only £1 out of the remaining £12 going to the retailer.

The Taxpayers' Alliance, which was formed in 2004 by a group of free market Conservatives to campaign for a low tax economy, is also calling for consumers to write to their local MP about the level of fuel tax.

Graphic comparing the price of a litre of petrol in Europe and the US as of June 2012

In June, Chancellor George Osborne announced he was postponing a 3p per litre rise in fuel duty, planned for August, until January 2013.

The chancellor had been under pressure from a number of backbench Conservative MPs as well as opposition parties.

Labour had called for the increase to be delayed until next January, saying the cost - between £500m and £600m - could be covered by the underspend on the Olympics budget or by closing tax loopholes and reversing changes to tax allowances for pension contributions for those earning more than £150,000.

Conservative MP Robert Halfon, whose e-petition on fuel prices triggered a Commons debate last November, welcomed the Taxpayers' Alliance's call for a freeze in fuel duty, but said that oil companies "had to bear their share of the responsibility" for high fuel prices.

He added: "I recognise that the government have made huge progress in cutting fuel duty."

Fair fuel stabiliser

In the 2011 Budget, the coalition government replaced the previous Labour government's "fuel duty escalator" with its own "fair fuel stabiliser".

Under the escalator, fuel duty was set to rise by RPI inflation plus one penny-per-litre until 2014-15, but the stabiliser restricts the rise to RPI only when oil prices are high.

A Treasury spokesman said: "Taken together, the government's support has been worth £5.5bn and means that pump prices are 10p a litre cheaper than they otherwise would have been."

The Treasury said it had to balance supporting motorists with the need to cut the deficit.

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