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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How can the government give us a long term plan to save the economy? They have got to hold an election in the not to distant future and if they think they'll get in again then they are more deluded than I thought. Hit the motorist and do they really expect that every retailer will be going round knocking the VAT down on all the items in their shops? 22p off a cd - whoopee do. That'll really make a difference to the price of food which is a necessity, whereas the fuel duty rise will put up the price of food. Gordon Brown had the reins of the economy in his hands for 10 years before becoming prime minister and what a mess he passed on to Mr Darling. Give the motorist a break and leave us alone for a change!!!!!!!!!
Just like before give and take, this cut in the VAT rate is all well and good but will the cut be passed down to the customers the stores may well keep the 2.5% in there own pockets.
The motorist didn't see all the decrease in fuel, when the oil barel prices dropped, but as usual we get to pay for anything the Labour government wants to give away.
If they want to increase the duty on fuel take off the road tax, it's not used on our roads, they are in a shocking state, and as we pay tax on fuel anyway isn't taht a fairer way to tax us, not keep hiting us twice?
I think it's time Gordon Brown and Alistair Darling hung up their red boxes and retired, and not to the fat cat House of Lords, give them a spell on the dole and on £59.15 per week like the rest of us/