FUEL TAX 2

The massive scale of Britain’s petrol tax rip-off is revealed in new research. It shows that recent Government tax rises have hit motorists here up to five times harder than those in Europe. Tax on unleaded petrol has shot up 13.5% since late 2008 at UK forecourts while drivers in Austria have seen their costs edge up by just 2.3% as a result of taxes. The UK’s petrol tax surge is more than double the average 5% average increase seen across 10 countries on the Continent where governments have held off piling so much additional tax on their drivers.

The Government has already announced plans to raise fuel duty by another 1p a litre, plus inflation, from April 1. The rise will mean up to 3p a litre to the cost of both unleaded and diesel. AA president Edmund King warned that another crippling duty hike would hit motorists hard as they struggled to cope with spiralling fuel costs. He said, “Most other European countries have resisted such fuel tax hikes over the past 15 months, and they have also had to deal with the fallout from the credit crunch.” said.

Despite a recent bout of deflation the total tax hike could be as much as 3p a litre because the Treasury plans to use its own inflation forecast based on what it thinks the rate will be in late 2010. Motoring groups are furious at the Government’s claim that it is raising petrol tax to tackle the country’s financial problems. Association of British Drivers spokesman Nigel Humphries said, “They just see the motorist as a cash cow. It is time to say enough is enough.” Drivers have suffered three fuel duty hikes since December 2008 which together have added nearly 9p to the cost of a litre of petrol once the additional VAT is taken into account.

The tax element of a litre of unleaded soared from 64.17p on the date of the November 2008 pre-Budget report, when the Chancellor first announced measures to tackle the credit crunch, to 72.86p in mid- February this year. That is a 13.5% rise in petrol tax over that period. Motorists in France, Germany, Ireland, Italy and Portugal have all benefited from increases of less than 4%. A Treasury spokesman insisted that the petrol tax hikes would help the wider economy. (Source: Daily Express, Mar/10)

In January 2003, people in the UK paid 75p a litre of petrol, of which 57p was tax compared with the US where drivers paid 24p a litre, just 6p of which was in tax, according to the study. What drivers in Britain pay in tax for a litre of fuel is more than twice what Americans pay for the fuel itself. Fuel is taxed at 340% and has little to do with the environment. Leaded petrol was supposedly taxed highly for environmental reasons. Why then, when it was replaced with LRP did the price not come down? Diesel fuel, although potentially renewable by using vegetable oils, is no longer substantially cheaper than leaded petrol.

So although it's technically cleaner (low sulpher etc), and potentially a renewable resource, it's taxed at near enough the same rate. LPG is the cleanest fuel there is but the government aren't actively trying to get you to convert. £36billion is sucked out of motorist's pockets each year in tax. A recent study pointed out that most of Britain's roads are up to 15 years beyond their structural refurbishment date. More to the point, your council tax and new car tax is supposed to pay for this, not the petrol duty!

According to the Association of British Drivers, in the last budget speech, Gordon Brown stated that fuel duty and pensions would rise in line with inflation, seeking credit for an end to the fuel duty escalator which had previously put petrol prices up above the inflation rate each year. Yet it has emerged that the figure he used for pensions was 1.1%, while 3.3% was used to raise the price of fuel. By scrapping the escalator, Gordon Brown removed this upper limit and was free to increase tax by as much as he saw fit.

Freight companies are suffering - so is our trade with the EU. When a haulage company has to fill it's tanks with diesel taxed at such a ridiculous rate, it's running costs become so expensive that companies take their business to haulage firms based on the continent. That in turn means a loss of income for our country. Public transport is not an option. Buses and coaches become more expensive again because of the underlying cost of running them. The privatised rail and bus companies continue to slash services and close branch routes because running them is not "cost effective." i.e. the shareholders aren't getting their dividends.

And the government are doing nothing about it. Rail companies have been underperforming and missing targets as stipulated by their contracts ever since privatisation. Yet they're all still in business. And again, your council tax should be paying for public transport. The petrol tax goes straight to the government instead of to local councils where it could be used to make some difference. If other consumer products were taxed at 340%:

* 2 pints of milk would cost £2.14

* a loaf of bread would cost £1.58

* a first class stamp would cost £1.13

* a cinema ticket would cost £21.94

* an evening out with dinner for two could cost £175.58

* a pack of batteries would cost £21.89

* a personal CD player would cost £566.26

Motorists will be paying almost £100million a day in fuel duty by the end of the current Parliament if Chancellor George Osborne ignores pleas to ditch a 5p tax rise. The figures, the equivalent of £66,000 a minute in fuel tax by 2015, have been revealed by the Government’s own watchdog, the Office for Budget Responsibility. Fuel campaigners warned that a rise in the Budget would bring “economic Armageddon”. Fair Fuel UK urged the Chancellor to put the rise on hold, while the Retail Motor Industry urged Mr Osborne to cut duty.

Brian Madderson, chairman of the RMI’s petrol division, said January’s VAT rise to 20% would net £2.2billion more for the Treasury which, combined with £4.3billion more from rising North Sea oil revenues, could be used to “soften” fuel prices. He said, “The five pence escalator, due on April 1, will be a duty tsunami which will engulf the entire nation, especially small and medium-size businesses and hard-pressed householders. Given the severe impact retail price rises are having on all sectors of the economy we now call upon the Government to use a large part of this £6.5billion windfall to cut existing duty levels by at least two pence per litre.”

Fuel duty remains one of the biggest revenue raisers for the Treasury. Fair Fuel UK has delivered a petition of more than 124,000 signatures to Downing Street calling for an immediate freeze and the eventual introduction of an affordable fuel duty stabiliser. It has the backing of 140 MPs whose postbags have been bulging with letters from angry voters. Spokesman Peter Carroll said, “We need action now. Fuel is to the economy what oxygen is to breathing and we are in danger of suffocating. People will be priced out of their cars, businesses will collapse, it is that bad. If he goes ahead with the rise it will be economic Armageddon.” (Source: Sunday Express, Mar/11)

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