The hike in VAT to 20 per cent in January has added nearly 3p to the price of a litre of petrol and will raise £700m for the Treasury, according to figures from the independent House of Commons Library.
The Labour Party says the VAT rise should be reversed immediately on petrol using the £800m extra the government is now getting from the bank levy, compared to what it was expecting in the last Budget.
“I’ve consistently opposed the Conservative-led government’s VAT rise which has hit families in Stockton North and helped to push up petrol prices to their current record levels.
“It’s time the Chancellor George Osborne took immediate action on fuel prices to ease the pressure on families who are already facing a tough year and their incomes squeezed. He should immediately reverse the VAT rise on fuel, which has added nearly 3p to the price of a litre of petrol, using the extra £800m the Treasury will be getting from the bank levy.
“And in the Budget later this month George Osborne should look again at the annual fuel duty rise due in April. The last Labour government often postponed planned duty increases when world oil prices were on the up – as they are now. The Tories promised a ‘fuel duty stabiliser’ to win votes before the election, but if they don’t deliver one it will just be another broken promise from this government.
“The AA’s latest fuel price report shows that across the North the average cost of a litre of unleaded petrol in February was 128.2p – up 6.8p compared to December before the VAT rise. And the current instability in the Middle East and North Africa is driving up oil prices around the world which means the price of petrol at the pump is continuing to rise.
“Now is the wrong time to be making things even worse for hard-pressed families in Stockton North by hiking up VAT, as this government has done. George Osborne should admit he got it wrong and reverse the VAT rise on petrol now.”