Monster Fuel Duty hike could drive up costs for taxi industry by over £1,000 a year
The UK taxi industry are watching warily with a potential rise in fuel duty expected in the October Budget. This increase could see fuel duty jump by 10p per litre, reversing the 5p cut introduced in 2022 and adding a further 5p.
The impact on drivers and operators, already grappling with rising fuel prices and inflation, is expected to be significant and could cost some over £1,000 per year in lost profit.
For many in the taxi industry, fuel is one of the largest ongoing operational costs. While electric vehicles (EVs) are slowly being adopted, the vast majority of taxis still rely on petrol or diesel. A 10p increase in fuel duty could raise the price of filling a 55-litre tank by £6.60. For taxi drivers who cover extensive distances each week, this would mean a noticeable rise in running costs, putting additional pressure on already tight margins.
The rise would come at a time when many taxi operators are already struggling with increased vehicle maintenance costs, rising insurance premiums, and even a stagnation in demand in certain areas. Further down the line, taxi drivers may be forced to pass on the extra cost to passengers with many already finding their earnings squeezed.
Electric vehicle adoption could offer some relief in the long term, but many taxi drivers have found the upfront costs of EVs prohibitive, even with government incentives. Moreover, the infrastructure to support electric taxis, particularly rapid charging stations, remains patchy, especially outside urban centres. There are also concerns around pay-per-mile taxation that could impact high mileage vehicles like taxis.
The Government is keen to plug the £22 billion hole in public finances, and fuel duty is a strong candidate for increasing revenue. However, the consequences for industries like taxis, which rely heavily on affordable fuel, could be far-reaching. Taxi drivers, fleet owners, and passengers alike may all feel the pinch as fuel duty is adjusted to meet fiscal goals, raising questions about the long-term sustainability of the current tax model on traditional fuel.
With the Chancellor set to announce the changes soon, the taxi industry will be watching closely to see how these potential hikes will affect their livelihoods.
