Rachel Reeves has raked in an extra £200million from drivers in little over six weeks thanks to higher pump prices sparked by the Iran war.
Analysis today shows the cost of the conflict to drivers will hit an eye-watering £1.3billion by tonight because of rocketing prices since 28 February, when the war started.
But it means the Chancellor’s windfall in greater VAT receipts has surged to £215million as higher prices means the 20 per cent levy accounts for a greater slice towards Treasury coffers.
Half of the price now paid at the pumps for filling up with petrol is tax and goes to Ms Reeves, when fuel duty is included. For diesel, taxes make up 45 per cent of the cost of filling up.
It sparked fresh accusations that she was ‘profiteering’ from the crisis and calls for her to use the windfall to slash fuel taxes to help out hard-pressed drivers and keep inflation down.
Canada and Germany have become the latest countries to announce they were slashing fuel taxes, piling on more pressure.
Canada said it was suspending its equivalent of fuel duty until September, while Germany unveiled a pumps relief package worth £1.4billion.
Rachel Reeves has netted an extra £215million in VAT receipts at the pumps as higher prices mean the 20 per cent levy accounts for a greater slice towards Treasury coffers
An average fill-up with petrol has already become £14 more expensive and £27 for diesel since 28 February, when the Iran war started
Lib Dem Treasury spokesman Daisy Cooper said Rachel Reeves was 'playing a dangerous game with the economy' by not slashing fuel taxes
Most European countries and other nations around the world have already slashed petrol and diesel taxes or capped prices to help out hard-pressed households.
But Ms Reeves and Sir Keir Starmer have instead insisted they are pressing ahead with plans to increase fuel taxes.
They have repeatedly dismissed calls to abandon their 5p a litre fuel duty hike, which is scheduled to kick in from September and will on average add another £3 to the cost of filling the typical 55-litre tank in a family car. An average fill-up with petrol has already become £14 more expensive and £27 for diesel since 28 February.
However, government sources today suggested a U-turn could be on the cards. One source said ‘possibly’ when asked if Ms Reeves may now scrap the hike.
It may form part of a cost-of-living relief package, expected to include an energy bill bailout for low-income households this winter.
While pump prices stopped rising yesterday, they are expected to remain high for several months.
And if the Strait of Hormuz, through which a fifth of the world’s oil travels, remains blockaded they could start rising again.
The Tories, Reform UK and Liberal Democrats have all called for Labour to drop its fuel duty hike, with the latter saying the Government should slash the levy by 10p a litre amid the crisis. It is currently 52.95p a litre.
The party’s Treasury spokesman, Daisy Cooper, said: ‘The Chancellor is playing a dangerous game with the economy.
‘At a time when local businesses and families are being hammered by a global energy crisis, it’s irresponsible for the government to be digging its heels in on its planned fuel duty hike.
‘If Rachel Reeves pushes ahead with this fuel raid, she’ll be forcing thousands of small firms into the red and sending food prices back through the roof.
‘The Chancellor must listen to the Lib Dems and introduce our emergency support package to cut petrol and diesel prices.’
Tory shadow transport minister Greg Smith added: ‘Cars are essential to millions of Brits.
‘Labour’s political choice to hike fuel duty is a massive kick in the teeth for so many, not least when other countries are cutting fuel duty.
‘This chancellor and PM need to get a grip, understand the real world and scrap their fuel duty hikes.’
A Treasury spokesman said: ‘Motorists are paying more because of the war in Iran. This is not our war and that is why we did not join it.
‘We are determined to keep costs down for motorists.
‘That’s why we have extended the 5p fuel duty cut twice until September and will continue to monitor the situation.’
