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Some tax lost on fuel duty 'recovered due to economic boost' Some tax lost on fuel duty 'recovered due to economic boost'
(about 2 hours later)
The government is to publish analysis which suggests the cost to the Treasury of freezing fuel duty could be offset by the economic boost it causes.The government is to publish analysis which suggests the cost to the Treasury of freezing fuel duty could be offset by the economic boost it causes.
The Treasury analysis, to be released by Chancellor George Osborne, says halting the tax rises will boost the economy by up to £7.5bn over 20 years.The Treasury analysis, to be released by Chancellor George Osborne, says halting the tax rises will boost the economy by up to £7.5bn over 20 years.
And it says this extra activity will mean the government recovers about half of the initial lost revenue.And it says this extra activity will mean the government recovers about half of the initial lost revenue.
Mr Osborne has said this approach could be a "quiet revolution" in tax debate.Mr Osborne has said this approach could be a "quiet revolution" in tax debate.
He has already published a study suggesting corporation tax cuts would benefit the economy.He has already published a study suggesting corporation tax cuts would benefit the economy.
He wants the government to produce more research into the broader impact of tax reductions, rather than regarding them purely as revenue which is lost to the Treasury.He wants the government to produce more research into the broader impact of tax reductions, rather than regarding them purely as revenue which is lost to the Treasury.
'Clear blue water''Clear blue water'
The government scrapped the fuel duty escalator, cut fuel tax by 1p in 2011 and froze it on four other occasions.The government scrapped the fuel duty escalator, cut fuel tax by 1p in 2011 and froze it on four other occasions.
It said these moves meant the tax - currently 58p - was 20% lower than it would otherwise have been.It said these moves meant the tax - currently 58p - was 20% lower than it would otherwise have been.
The Treasury used a method called "dynamic modelling" to calculate the wider economic effects of keeping fuel duty down.The Treasury used a method called "dynamic modelling" to calculate the wider economic effects of keeping fuel duty down.
Its conclusion was that the policy would increase gross domestic product by up to 0.5% - about £7.5bn in today's prices.Its conclusion was that the policy would increase gross domestic product by up to 0.5% - about £7.5bn in today's prices.
Some conservative MPs believe this approach would make it easier to argue for tax reductions even when borrowing levels are high, BBC political correspondent Iain Watson said.Some conservative MPs believe this approach would make it easier to argue for tax reductions even when borrowing levels are high, BBC political correspondent Iain Watson said.
"That in turn could put clear blue water not just between the Conservatives and Labour at next year's general election, but between them and their coalition partners too," he added."That in turn could put clear blue water not just between the Conservatives and Labour at next year's general election, but between them and their coalition partners too," he added.
Has the freeze on fuel duty had an impact on you? Share your experiences by emailing haveyoursay@bbc.co.uk with the subject heading 'Fuel duty'.