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Fuel duty damages employment says report

05 December, 2012

Fuel duty has a negative effect on employment according to a report published by the influential think tank, The Institute of Economic Affairs.

In its report, ‘Time to Excise Fuel Duty?’, the Institute’s deputy editorial director Richard Wellings says any increases in travel to work costs have a disproportionate effect on those on low incomes.
He says that travel to work costs are so great for many people on benefits that there is either very little incentive for them to work, or it may even cost them money.
Using estimates from the AA he says fuel duty accounts for about one third of the costs of those travelling to work by car or van.
He concludes: “Given the strong evidence that travel-to-work costs have  a significant impact on work incentives for those on low incomes, and that work incentives affect levels of worklessness, it follows that fuel duty is likely to have a negative effect on employment.
“As the government introduces welfare reforms designed to improve work incentives, there is a strong case for policy-makers to consider in detail the effect of travel-to-work costs, of which motoring taxes form a major component.”