Support for incomes, unlike tax cuts for motorists, would help offset the full spectrum of forces that are eroding living standards. Not everyone drives, but everyone needs food and warmth
Save time by listening to our audio articles as you multitaskThese tax cuts are a mistake. They will waste money and make it harder to wean the rich world off fossil fuels. There are better ways to help people cope with rising energy prices.
That means today’s fuel-tax cuts are wasteful. Governments could spend the same amount of money on other policies to help households without suffering a 30% leakage. It also makes the policies perverse, because the producers who benefit include Russia, whose oil Europe continues to buy, despite its invasion of Ukraine.
In the long term fuel duties lead people to switch to electric cars or public transport, reducing carbon emissions. They also mean that driving bears more of the other costs it imposes on society, such as congested roads and dirty air. These goals are less pressing than the energy crisis, and today’s cuts are presented as temporary. But fuel duties are notoriously difficult to raise because they are so unpopular, meaning that the cuts may become permanent.