Reduction of Excise Duty on road fuel

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to  request  the  Minister  for  Treasury  and  Resources  to  bring  forward  the necessary legislative amendment required to temporarily reduce excise duty on road fuel by 10 pence per litre for the period from 1st October 2026 to 31st December 2026.

DEPUTY L.K.F. STEPHENSON OF ST. MARY, ST. OUEN AND ST. PETER

REPORT

Note: this proposition has been prepared and lodged as a tentative peace deal was announced between the US and Iran, which will hopefully lead to the reopening of the Strait of Hormuz. The situation is fast changing but a settled peace deal will hopefully lead to a permanent reduction in global oil prices which will directly reduce prices in Jersey. Due to ongoing uncertainty, the fact that the deal has just been announced and the much higher costs Islanders have experienced over a number of months it still feels necessary to lodge this proposition. It can then be debated in light of the global context at the time.

Cost of living pressures was the number one issue highlighted by Islanders at this year's election. It is no longer just those on the lowest incomes struggling to make ends meet, but spiralling costs are impacting Islanders at all ages, stages of life and those earning a seemingly "good" wage. We no longer have a temporary cost of living crisis but a sustained, long-term economic and human challenge. In response, seemingly every single election candidate – and therefore all States Members now in office – said they would take action on the cost of living. This proposition is an opportunity to follow through on that commitment.

The reality is that Jersey has limited direct levers it can pull to reduce cost of living pressures. Fuel duty is, however, one such lever, as the Island sets its own. The aim of this proposition is therefore simple: to reduce fuel duty by 10 pence per litre for the remainder of 2026.

Such action would provide immediate relief to the spiralling costs exacerbated by the ongoing conflict in the Middle East, reducing the cost of filling up an average family car with petrol by around £5. It would have broad impact but particularly help those who rely on their cars for work, such as delivery drivers, cleaners and carers, and families who rely on vehicles to get children to and from school and activities. It would also help many businesses which use vehicles to transport and deliver goods.

Statistics show that Jersey continues to have a high reliance on cars and the latest Household Spending report produced by Statistics Jersey showed that the average weekly household spending on transport was £112 – 12% of average income and the second highest spending category as average percentage behind the category which includes housing, fuel and power[1]. Fuel is just one element of "transport" but the statistics are an important reminder of the impact that transport costs have on household budgets, and costs have only risen since that survey was conducted in 2021/2022.

As the Minister for Treasury and Resources is the only person able to enact a change in duty or tax (pursuant to the Public Finance (Jersey) Law 2019), this proposition asks the Minister to take the relevant steps to implement the temporary change. If approved, it would be assumed that action should be taken as soon as practicably possible so that Islanders can feel the benefit as soon as possible. As the Minister would need to bring the necessary legislative amendment back to the States Assembly for approval, it should be lodged for debate at the first sitting back in September, currently scheduled to begin on 8th September. The reduction, if approved, should take effect from 1st October 2026.

Fuel duties for 2027 can then be considered by the Assembly as part of the next Budget in December.

For context

Following freezes on road fuel duty to assist with the cost of living in 2023, 2024 and 2025, in the last Budget – approved by the States Assembly in December – Ministers returned to the practice of indexing fuel duty with RPI growth to maintain its value in real terms. It therefore rose by 2.6% to £65.55 per hectolitre (100 litres)2, meaning duty is currently around 65p per litre. The increase was forecast to lead to an increase in government revenue of £620,000 a year.

In addition, GST is also charged at 5% on the total cost of fuel, including duty. This means that as the price of fuel has been increasing the government has been collecting more GST than originally forecast.

Quarterly excise duty statistics show that a total of 5,432,146 litres of petrol and 3,655,017 litres of diesel were imported into Jersey in the first quarter of 20263.

The Jersey Consumer Council provides regular data about the cost of fuel prices locally on its comparison site www.prices.je. As of 11th June 2026 the cheapest price locally for unleaded was 157.90p per litre and 178.90p per litre for diesel. The highest for unleaded was 187.50p per litre and 198.90p per litre for diesel. The figures emphasise the need for consumers to continue to shop around for the best prices. Should this proposition be agreed, government should encourage retailers to ensure that the full 10p per litre reduction is passed on to consumers at the pump.

The council's website also clearly shows the significant impact of the Iran war on local road fuel prices, reflecting global pressures as a result of the impact on the crucial shipping lanes of the Strait of Hormuz, through which around a fifth of the world's oil would normally be transported.

On 26th February, just two days before the US and Israel launched strikes on Iran, the total price for the sum of all garages combined for unleaded stood at 3,597.80p, and 3,822.40p for diesel. In the days, weeks and months since it has risen sharply, surpassing even the highest levels experienced in mid-2022 following the Russian invasion of Ukraine 4. On 11th June 2026 the comparable total sum figures according to Price s.je were 4,140.40p for unleaded and 4,616.90p for diesel.

2https://www.gov.je/SiteCollectionDocuments/Government%20and%20administration/Budget %202026%20to%202029.pdf 3https://www.gov.je/SiteCollectionDocuments/Travel%20and%20transport/Quarterly%20excis e%20duty%20statistics%202026.pdf

4 https://prices.je/dl/17171d

Support for a reduction

Charity Caritas Jersey has said publicly it supports a 10p per lite cut in fuel duty as an "immediate measure" to support Islanders with rising costs.

In an interview with the Jersey Evening Post published on 27th May the charity said the move would serve as a "tangible benefit", particularly to those on lower wages – noting higher levels of driving were seen in certain professions such as cleaners and care workers[2]. In the same article the ATF Fuels director also supported a reduction to help consumers with the cost of living.

Jersey's Consumer Council has also raised concerns about government profiting off Islanders through increased tax takes because of rising fuel prices. As GST is charged on the price of petrol and diesel, inclusive of fuel duty, as costs increase so does the amount of tax that the government collects.

The Consumer Council has been calling for a fuel duty reduction since April this year. The Chair of the Consumer Council, told the BBC it was not just people with vehicles being impacted because the rising prices were included in "everything that we deliver" and "everything that we consume"[3].

Examples from elsewhere

• Germany, where petrol and diesel prices are among the highest in Europe, introduced a 17 cent per litre reduction in duty for two months in response to the knock-on effects of the Iran crisis.

• Sweden is to lower prices on petrol and diesel by 3 Swedish Crowns ($0.3) per litre between July 1 and November 30.

• Australia halved duty on petrol and diesel for three months, reducing the cost of fuel by 26.3 cents per litre and the cost of a 65L tank of fuel by nearly $19.

• The UK government has announced that its 5p cut on fuel duty, introduced in 2022 following Russia's invasion of Ukraine and the subsequent impact on prices, will be extended to the end of the year instead of being phased out in September.

• In March the Irish government cut duty on diesel by 20 cents per litre and petrol by 15 cents per litre until the end of May.

• The federal fuel excise tax in Canada has been temporarily suspended from 20 April 2026 to 7 September 2026, with rates reduced to 0 cents per litre for gasoline, diesel fuel and aviation fuel, in an effort to alleviate fuel price pressures caused by global oil disruptions.

• Italy introduced a temporary fuel duty reduction in March, initially for 20 days. However the suspension has since been extended multiple times.

Financial and staffing implications

Based on figures included in the 2026 Budget, a 10p per litre reduction in fuel duty would equate to around £3.7m a year, roughly £308,000 a month, in reduced revenues for government. A reduction for three months from October to December (which is the realistic outcome should this proposition be successful and a proposition brought back to the Assembly by the Minister for Treasury and Resources in September) would therefore equate to just over £900,000 in reduced revenues. This would be offset by an increased tax take in GST as a result of the significantly higher prices.

It will be up to ministers to decide how to accommodate the reduced income in light of the detailed figures they will have available on the GST offset. However, one option would be to reduce the amount paid from fuel duties into the Climate Emergency Fund. Currently 9p of duty (around £3.3m a year) is transferred into the fund, with the balance going into the Consolidated Fund.

Children's Rights Impact Assessment

I consider that this proposition has no direct or indirect impact on children and that the duty to have due regard to the UN Convention on the Rights of the Child does not arise. Accordingly, a Children's Rights Impact Assessment is not required under the Children (Convention Rights) (Jersey) Law 2022.

[1]https://www.gov.je/SiteCollectionDocuments/Government%20and%20administration/R%20H ousehold%20Spending%20Report%202021%2020233110%20SU.pdf

[2] https://jerseyeveningpost.com/news/2026/05/27/fuel-duty-reduction-needed-as-an-immediate- measure-to-help-islanders-says-charity/

[3] https://www.bbc.co.uk/news/articles/cx2vdyg634lo