EXPLAINED: Could cutting fuel duty be the new Assembly’s first cost-of-living move?

The first battle of the newly elected States Assembly will be fought at the pumps, with one Deputy pushing to cut fuel duty by 10p per litre as politicians come under pressure to deliver on election promises to tackle the cost of living.

Deputy Lucy Stephenson – who topped the poll in St Mary, St Ouen and St Peter – today became the first States Member to formally lodge a proposition since this month’s election, arguing that fuel duty is one of the few direct levers available to ease financial pressures on Islanders. 

If approved, the proposal would require the next Treasury Minister – who is yet to be decided by the new Assembly – to bring forward legislation reducing excise duty on petrol and diesel between 1 October and 31 December this year.

Deputy Stephenson estimates the three-month measure would reduce government revenues by just over £900,000. 

“Cost of living pressures was the number one issue highlighted by Islanders at this year’s election,” Deputy Stephenson wrote.

“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.” 

Why is Deputy Stephenson proposing the cut?

The Deputy argues that Jersey has limited tools available to directly reduce living costs, making fuel duty one of the few areas where politicians can act quickly.

“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,” she wrote. 

Deputy Stephenson says the proposal would provide “immediate relief” following months of rising fuel prices linked to instability in the Middle East.

How much would drivers save?

The proposition seeks a temporary 10p-per-litre reduction in excise duty on petrol and diesel. 

She estimates it would reduce the cost of filling an average family car by around £5 and particularly help Islanders who rely on vehicles for work, including carers, cleaners and delivery drivers. 

The proposal also calls on the government to encourage fuel retailers to pass the full reduction on to consumers at the pump. 

How much would it cost the Treasury?

According to figures contained within a report accompanying the proposition, a 10p-per-litre reduction would cost the government around £3.7 million over a full year.

However, because the measure would only run for three months, from October to December, the estimated reduction in government revenue is just over £900,000. 

Deputy Stephenson argues that some of this would be offset by the additional GST revenues generated by higher fuel prices.

“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,” she explained.

“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 2026.”

She also suggests ministers could consider reducing the amount of fuel duty transferred 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,” she noted.

Haven’t fuel duties already been frozen?

Fuel duty was frozen in 2023, 2024 and 2025 as part of efforts to ease cost-of-living pressures.

However, last year’s Budget returned to increasing fuel duty in line with inflation, which resulted in a 2.6% increase this year. Duty currently stands at around 65p per litre. 

“The increase was forecast to lead to an increase in government revenue of £620,000 a year,” Deputy Stephenson noted.

Who is backing the proposal?

Caritas Jersey and the Jersey Consumer Council have already made calls for the government to take action on fuel duty to reduce the burden on consumers.

Caritas previously described a 10p fuel duty cut as an “immediate measure” to help Islanders facing rising costs, while the Consumer Council has been calling for a reduction since April. 

Have any other jurisdictions taken similar actions?

In a report outlining the rationale for her proposal, Deputy Stephenson explained that temporary cuts to fuel taxes have been used by governments around the world.

Germany introduced a 17-cent-per-litre reduction during the recent Iran-related energy price spike, while Sweden is due to cut petrol and diesel prices by the equivalent of around 30p per litre between July and November, the Deputy pointed out.

Ireland reduced duty on diesel by 20 cents per litre and petrol by 15 cents per litre earlier this year, and Canada temporarily suspended federal fuel excise tax altogether. The UK has also repeatedly extended its 5p-per-litre fuel duty cut, first introduced following Russia’s invasion of Ukraine in 2022.

What happens next?

The earliest possible debate date is 14 July, making it the first formal proposition submitted by a member of the newly elected Assembly. 

If approved, the next Treasury Minister would be asked to bring back the necessary legislation in September, allowing the reduction to take effect from 1 October. 

However, Deputy Stephenson acknowledged that global circumstances could change before States Members come to debate the proposal.

In a note at the start of her report, she pointed to a tentative peace agreement announced between the US and Iran, which she said could eventually help bring down oil prices if it leads 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,” she wrote.

“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.”