2p Fuel Tax Increase Dropped

As widely expected, the Chancellor Alistair Darling cancelled the proposed rise in petrol tax. Keeping petrol tax rates at 50p a litre.

I have previously written why I disagree with this populist move - 10 Reasons not to cut Petrol Tax

The difficult thing is how the Chancellor is going to finance this tax cut? (£2.6 billion)

• Government Borrowing is already reaching record levels.
• Stamp duty tax is falling
• A recession would lead to lower income tax and VAT revenues.
• People don’t like paying petrol tax, but, I doubt they will be overjoyed to have a 1p increase on the basic rate of income tax.