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| Version 3 | Version 4 |
|---|---|
| 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. |
| 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. |
| 'Increased car use' | |
| The BBC Environment Analyst Roger Harrabin points out that the recent UN climate change panel said high fuel taxes could help bring down carbon emissions. | The BBC Environment Analyst Roger Harrabin points out that the recent UN climate change panel said high fuel taxes could help bring down carbon emissions. |
| He questions whether the Treasury's conclusions account for the economic costs of increasing car use. | |
| He suggests that air pollution and congestion will increase so other sectors of the economy will have to cut emissions more to compensate. | |
| David Powell, economics campaigner for Friends of the Earth, said the Treasury's modelling method fails to consider that environmental and social impacts of cutting taxes can also effect the economy. | |
| For example a rise in air pollution could lead to more people in need of healthcare and increased congestion could lead to longer commutes for workers, he argued. | |
| Mr Powell said: "(The Treasury) need to stop giving themselves and the public such a one-side view of policy. | |
| "They just focus on GDP - and GDP doesn't tell us about air pollution or climate change or about things that really matter to people. | |
| "They need to have a much more sensible approach to policy-making that accounts for social and environmental impacts too." |