By IRNA,
London : Chancellor of the Exchequer Alistair Darling announced Wednesday that the government was again postponing a planned 2 pence (Dlrs 0.04) rise in fuel tax that was due to come into effect in October.
The British Treasury was originally planning to introduce the increase in April, but Darling postponed the increase in his March budget for six months.
“The global credit crunch and sharp rises in world oil prices have pushed up prices at the pump. Today’s decision will help motorists and businesses get through what is a difficult time for everyone,” he said.
The decision was welcomed by motorists, who have seen petrol and diesel costs soar by nearly 20 per cent so far this year alone due to record oil prices.
“We are delighted that the chancellor has seen common sense. The prospect of extra, government-inflicted pain was not something that road users were looking forward to,” said president of the AA automobile association, Edmund King.
Fuel tax already accounts for 50.35 pence of the current average price of around Pnds 1.20 for a litre of standard unleaded petrol.
In addition, the government also earns revenue from value added tax in the price.
It is estimated that the British Treasury will lose around Pnds 600 million by delaying the planned 2 pence hike for a further six months.
But according to Oil & Gas UK, the government is set to earn a windfall of an extra Pnds 15 billion in tax revenues from the North Sea this year due to record oil prices.
Some analysts suggested that the timing of the announcement to postpone the increase was linked to Labour defending a crucial by- election in Glasgow next week.
The Scottish National party, which is challenging to win the parliamentary seat, has been campaigning that voters should reject Labour to send a message to Prime Minister Gordon Brown about the need for the fuel duty increase to be delayed.