24.11.08 Fuel prices to rise as motorist hit with 2p duty increase
A permanent 2p duty increase in fuel tax has been introduced in the pre-budget report, which despite being presented as revenue neutral, will mean that fuel prices will rise over the next year and beyond.
The move to increase fuel duty by 2p has been introduced to offset the rate cut in VAT from 17.5% to 15%. However, although the VAT holiday will last 13 months, the 2p duty rise is permanent.
When VAT returns to 17.5% motorists will still be paying the higher rate fuel tax of 52.35p per litre and the higher rate VAT, making tax 74% of the total cost of a litre of fuel, and instantly boosting the cost of fuel by 2p a litre.
If the Chancellor had instead announced scrapping duty and VAT, a litre of petrol would cost just 25p.
The changes are designed to be neutral, but calculations by PetrolPrices.com show that there will be a slight increase at the pumps of 0.4p a litre, or 20p per average 50 litre tank of unleaded when the changes come into effect on December 1st. The fact that fuel prices will increase at all is contrary to the message from the Chancellor that the changes will be revenue neutral.
Motorists and businesses will effectively be bearing the brunt of the costs involved with implementing changes to help the UK as it heads into a recession.
Fuel is taxed twice – a fixed duty and percentage VAT. The changes mean that the fuel duty will be 52.35p per litre and VAT will be 15% from the 1st December.
Do you think the Chancellor did the right thing? Is it fair to make motorists foot the bill for the cost of reducing VAT? Should we have VAT on fuel at all?








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When fuel prices are increased the costs related to a huge raft of consumer goods, foods, services, transport costs (public and private) and everyday essentials inevitably rise. As usual the government's approach hits the masses but featherbeds the "excessive expence account" politicians.
Also why does diesel fuel cost so much more in the UK than petrol. In virtually every other European country diesel is a much cheaper fuel - per litre.
Is this yet another example of the British people being ripped off by both it's incompetant, greedy government and the oil industry
Apart from yet again disguising a tax increase, if fuel increases it's not just "at the pump" that this will be noticable. Delivery costs will increase no doubt and if so, it will be passed on to the consumer. This just doesn't make any sense to me!!!
I can't say I'm surprised, The labour government have treated the motorist as it's private treasure trove since the day it got in. What really makes me bloody angry is the price differential between petrol and deisel. You will find deisel is cheaper than petrol on the continent, in this country we are paying up to 13 pence per litre more! This cannot be right. I look forward to being canvassed by a labourite come the next election!