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Plan for petrol tax ‘unworkable’

Government plans to rework fuel tax to ‘share the pain’ with motorists have been branded ‘unworkable’ by a Government watchdog.

Robert Chote, head of the Office for Budget Responsibility, said the proposed ‘fair fuel stabiliser’ would create chaos in the public finances.

The Government’s idea is to cut duty as oil prices rise and increase it as they fall, but the Treasury - and the independent OBR - have doubts over whether it will work.

Yesterday, Chote, a respected economic forecaster, said that a fair fuel stabilizer ‘would be more likely to make the public finances less stable than more stable'.

He continued: ‘As oil prices rise overall economic performance is hit, meaning total tax revenues go down. This leaves the Treasury with little room to lower fuel duties, unless it increases taxes elsewhere.’

'Even if higher oil prices did boost the public finances, there would still be the practical problem of deciding at what price you wanted to start increasing or reducing fuel duty,' he added.

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