Motoring groups fear fuel tax hikes in budget

By Stefano Ambrogi

LONDON (Reuters) - Motoring groups warned the Treasury on Tuesday not to sneak a surprise fuel tax rise into the budget in a bid to shore up the public finances, a move hauliers say would cripple the industry.

"Judging by where we are at in terms of the public finances it's definitely not beyond the realm of possibility," said spokeswoman for the Freight Transport Association Jo Tanner.

"Whether or not he (Chancellor Alistair Darling) has the chutzpa to raise it again, for the third time in five months, remains to be seen," Tanner said.

"We have raised this spectre with our members: our big concern is it won't be just one big jump this time, that it will (instead) be an increase in July and then another in the autumn that will be pre-announced," she said, pointing out that Britain already had one of the highest fuel tax regimes in the world.

Motorists and the freight transport industry have already been hit by a 2.12 pence (inclusive of VAT) per litre rise in duty on petrol and diesel that came into force on April 1.

The rise came on top of a December tax increase of 2 pence a litre on both fuels, a rise deferred from April 2008, when global oil prices were at record levels.

The UK Automobile Association (AA) said this week that a combination of rising oil prices in the last month and the duty rise had pushed average petrol prices to 95 pence a litre and diesel to well over a pound.

But oil prices are falling fast again as concerns over the impact of the deepening recession mount, giving the Treasury more room to lift duties, motoring groups say.