By. Hugo Gye. and Alex Brummer. George Osborne today hinted at the possibility of future tax cuts as he published a report claiming that cancelling planned rises in fuel duty has boosted the economy by up to £7.5billion. The analysis could imply that the Chancellor intends to cut taxes in the next Parliament if the Conservatives manage to win a majority in the 2015 election. The Treasury study released today estimates that the effective 20 per cent real cut in fuel duty since 2010 will add 0.3 to 0.5 per cent to growth over the long term. Hint: George Osborne could use a Conservative majority to cut taxes. The study, using a model by Her Majesty’s Revenue and Customs, supports the view of supply side economists who argue that over time lower taxes will produce higher revenue for the Exchequer. Some Tory backbenchers have been angry at the Coalition's reluctance to cut taxes since coming to power, thanks to the need to reduce the deficit. Increasing numbers of workers have been dragged in to the 40p tax band, leading to accusations that the Government has turned its back on its traditional middle-class supporters. Mr Osborne has come under pressure to cut income tax, but has so far resisted calls for 'unfunded' cuts. However, the timing of the new report is expected to point to a looser fiscal policy in a future Conservative Government. Growth: Fuel duty cuts have produced an increase in GDP by between 0.3 and 0.5 per cent. A Treasury official said: 'Fuel duty cuts have produced an increase in GDP by between 0.3 and 0.5 per cent (£4.5bn to £7.5bn in today's prices). 'This equates to an average share per household of between £175 and £300 and increased investment by around 2 per cent,' a Treasury official said. Since the Chancellor arrived at the Treasury, fuel duty has been cut by 13 per cent when inflation is taken into account. Without the policy changes, it would have jumped by 7 per cent. The result has been a 20 per cent benefit for consumers or industry. Oil prices have long been seen as a hidden tax on business and the consumer that can have a deleterious impact on economic expansion. According to the study, fuel duty that hits both businesses and households hard is ‘one of the most distortive taxes.’ The costs are particularly pronounced on business because an initial tax rise in 2010 was set too high. Successive governments have used fuel duties as a ‘sin tax’ designed to keep vehicles off the road and fulfil the agenda of green activists. The first fuel duty cut in 2010 had the greatest impact on national output and the impact became less with subsequent reductions. The Chancellor believes that his tax cut agenda that has seen corporation tax reduced to 21 per cent and the highest rate of income tax brought down from 50 per cent to 45 per cent is making a significant contribution to the UK’s recovery, the most robust among advanced countries. In his most recent budget Osborne extended and doubled the investment allowances for smaller businesses in an effort to encourage the fixed and business investment necessary to support output.

What are highlight points for this article?
Fuel duty has been cut 20 per cent in real terms since May 2010. Study proves that over time lower taxes provide higher tax revenues. Report could help George Osborne cut taxes in future Conservative majority.