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Osborne rejects further fuel duty cut

Chancellor indicates he also wants to close off loophole that allows millionaires to pay a reduced rate of stamp duty

George Osborne gave his strongest hint on Sunday that he has ruled out further cuts in fuel duty for motorists in the budget.

The chancellor told the Murnaghan programme on Sky News that that fuel duty is six pence lower today than it would have been, due to the action he had taken in his autumn statement in November and in his budget last year.

“I have taken action already this year to avoid increases in fuel duty which were planned by the last Labour government. That involved committing several billion pounds of resources, it has involved putting a tax on oil companies instead of families and motorists and businesses, precisely to ameliorate the impact of these high world oil prices on the British public.”

The chancellor faced pressure from Liam Fox, the former defence secretary, to stand up to the Lib Dems on tax. The junior coalition partners are calling for a “mansions tax” on properties worth more than £2m, and to speed up plans to remove low earners from the income tax bracket by raising the income tax threshold to £10,000.

Fox told the Sunday Politics programme on BBC1 that the chancellor should ease the burden on employers, adding: “Some of the arguments put forward by our coalition partners … need to be taken on and in my view overridden, otherwise we become about managed decline for Britain and not international competition for Britain.”

Osborne indicated he was keen to close off a loophole which allows millionaires to pay a reduced rate of stamp duty by purchasing properties through companies registered overseas. It is estimated that this will raise no more than a few hundred million pounds.

The chancellor said: “These are wealthy people who just avoid stamp duty when they buy and sell a home, that’s something I’ve made very clear is unacceptable.”

Osborne indicated that he would adopt a cautious approach in meeting the Lib Dem call for the tax threshold to be raised to £10,000. He said that any tax cut has to be met by other tax rises or spending cuts and not by increasing borrowing.

“We are committed in the coalition agreement to a real increase in the personal allowance each and every year. We are taking over a million people out of tax altogether with the action we’ve already taken, those on low incomes. I listen very carefully to what [Nick Clegg] says. He knows as I do, as the country knows, that any tax cut would have to be paid for. In other words there would have to be a tax rise somewhere else or a spending reduction – what we are not going to do in this budget is borrow more money to either increase spending or cut taxes.”

The remarks by the chancellor came as Lord Oakeshott of Seagrove Bay, an outspoken Lib Dem peer, warned that his party was prepared to block moves to reduce the size of the House of Commons if Tory MPs stand in the way of reforming the upper house. “I think we will not be wanting to put that through if they welch on the other half of the deal,” he told Sunday Politics. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds