Economic analysts and experts have predicted that the £8billion tax windfall will announced in tomorrow’s budget. The increase in fuel duty over the past year has naturally hit motorists and the transport industry alike. At the same time, North Sea oil companies have also been subject to a higher rate of corporation tax. A combination of decreased spending and larger than expected revenue has created the surplus windfall. As a result, chancellor George Osborne could potentially announce a halt on the proposed April 1 fuel tax increase.
Mr Osborne told the BBC’s Andrew Marr Show yesterday. “Having undertaken the rescue mission last year, I don’t have to come back and ask for more this year. So I can say in the Budget this week I am not going to be asking for more tax increases or more spending cuts.”
Andrew Goodwin, senior economic adviser to the Item Club, said: ‘We are at the start of a very long and treacherous road and there will be many more obstacles to negotiate before the government’s finances are restored to balance. Given how wary the chancellor has been of sending the wrong signals to the financial markets we expect him to hold back the bulk of the windfall to guard against potential slippage later on.’
This suggests that the proposal is by no means set in stone and is of course subject to change, especially given the fragility to the economic climate.