Fuel Tax Cut Vital to Remove Inflationary Pressures on Delivery Costs

Inflation has put quite a bit of pressure on business costs, and it continues to do so. Because of this, Logistics UK has asked Chancellor Nadhim Zahwai MP to take action to protect the nation’s supply chain. Ideally, swift action would prevent price hikes in goods by introducing a reduction in fuel prices.

Fuel is Key

Logistics UK’s Policy Director, Kate Jennings, explains that fuel is critical for delivering goods across the country. The domino effect of sustained prices will translate to higher costs for consumers and businesses. Jennings said: “77% of all UK supply chain journeys are by road while others always have a road element to provide first- or last-mile deliveries. With forecourt diesel prices increasing by 34% since the start of the year, the cost of delivering for UK PLC has risen significantly in that period. This ongoing inflation is placing an unsustainable burden on logistics businesses which operate on very narrow margins and so cannot absorb increased costs at this scale.”

What is the solution?

A possible solution to the steady price rise could be a new dynamic system. Portugal recently introduced this type of system, where the duty rate is reduced every week when there is an increase in VAT revenue. A similar system to Portugal could be the answer here as well. Using an approach like this will enable the Treasury to achieve tax targets through VAT payments. However, introducing a system like this could have drawbacks. There must be measures in place to prevent the fluctuations in fuel taxes from adding to inflationary pressure in other areas. Nevertheless, a cut in fuel prices could result in substantial savings that could help to relieve the pressure on businesses.

As talks about how to alleviate this inflationary pressure continues, we’ll keep you updated on developments.