VAT CUT CANNOT MASK FUEL DUTY RISE - HANNIGAN

11.03.00am GMT Fri 5th Dec 2008

Following the Commons debate on the Queen's Speech yesterday, Liberal Democrat campaigner for Cardiff South and Penarth Dominic Hannigan, spoke up on behalf of small and medium sized businesses affected by the increase in fuel duty.

A number of companies in Cardiff South & Penarth will be affected by this increase, which will effectively negate the Government's cut in VAT.

Commenting afterwards, he added:

"V.A.T. has been reduced by 2.5%. But it's a cheat because fuel duty has been increased by 2.5%! So I and every other citizen will be paying the same for fuel as we did before the tax change.

"However the real losers are V.A.T. registered businesses. They're going to pay MORE, because there's been a 2.5% increase in fuel duty. They didn't pay the V.A.T. in the first place, so this is a tax increase. In other words, the Government will be getting MORE tax revenue from fuel, not less. And the extra's coming from the very small businesses and transport companies the government was implying it was trying to protect. Few people have spotted this scheme, and so they've got it "under the radar." But all businesses will feel the difference soon enough. It would be better for a more transparent approach, because this sort of spin only makes people cynical about the whole process."

"I remain unconvinced as to the Government's economic policy and believe that a cut in income tax is what is needed and not a cut in VAT and increase in fuel duty!"