29.08.06 In depth information about fuel tax

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If you want to learn about fuel prices in detail, read the 10 page report on Fuel Taxation published by the Institute for Fiscal Studies.

The author, Andrew Leicester, looks at historic fuel prices and duty. He goes on to compare UK fuel prices with prices in other European countries. He researches how much money the government raises through fuel tax and he considers external costs such as pollution.

This is a very interesting analysis and is highly recommended for anyone wanting to really get to grips with fuel prices and how taxation is used by the government to influence our use of motor vehicles.

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A multilateral approach to fuel tax, instead of Britain going it alone with a unilateral approach, would make our prices rise in line with the rest of Europe and the world. There would be agreement about the taxes needed to try to reduce CO2 emissions, and toxic emissions like sulphur dioxide. The results would be:
1. similar fuel prices all over the world, or at least in Europe;
2. fair treatment for British people, instead of having to pay more;
3. less resentment by Britons at having our own oil reserves for over twenty years yet receiving none of the benefits, all of which went to successive governments;
4. fair treatment for business, having similar transport costs here instead of having higher costs than all their rivals in the EU, undermining their competitiveness;
5. to give companies less reason to close down here, or outsource to other countries where transport costs are lower, so saving jobs.

Posted by David Green, 29th August 2006 4:25pm

One advantage of our high fuel tax is that the oil prices rises of the last three years are not hitting us as hard as the US. We are seeing much smaller percentage increases here, because so much of the price is a fixed duty. We need to get used to even higher prices soon as global oil production is near its all-time peak, but demand is still climbing - this is what has driven the prices so high in recent years. The oil production peak is expected to be by 2010, after then we're going to see a very different world. Google for "peak oil" if you want to find out more, or for "peak oil" and "uk" to see what's going on locally on the issue.

Mike

Posted by Mike Pepler, 29th August 2006 5:21pm

I would have to take issue with the statement that fuel tax is used to force changes in use of vehicles and raise revenue. Whilst it does raise revenue it cannot influence vehicle use for me or most other people near me.
Living in the Bristol are where there is no economically viable alternative to using a private car (- it costs £400.00 p.a. for my son to get to school by Bus (No the LEA will not pay as he is in 6th form)) no matter what tax is added to fuel I have no option but to pay it.
In order to be used as a method of influencing vehicle use there would firstt have to be a viable alternative. This is true for everyone - not just disabled drivers such as myself.

Posted by Jim Elliott, 31st August 2006 6:43pm

The country, and the world runs on money - the money comes from us in one way or another, through taxation.

Fuel is just one way, if it wasn't this it'd be another.

The end consumer will always pay, so we pay VAT on our goods which have been delivered by trucks which use fuel which has been taxed.

Give an alternative?

Let's say we all get our FULL pay (no taxes) and the only tax we ever pay is on what we buy. Things would be very heavily taxed, to raise the same amount of money as gets raised now. The end result is the same.

So - tax on fuel means that it is distributed quite fairly. The more you use the more you pay. The cost is then past on as goods are delivered and we finally pay for them at the end.

There is no way around it, our government chooses to tax fuel others don't but one way or another they will get the tax revenue, so give me a better way please - I would be very interested.

Posted by Martyn Morgan, 4th September 2006 6:54pm

Instead of taxes us under different headings would it not be cheaper, cost effective to have one tax rate on all sources of income.

It would reduce Revenue costs/ civil servents because tax would be deducted at source. less admin etc.

Form UK Plc - get rid of unproductive civil servants/MP's - appoint directors with specific responsibility - pay them well & get best people for the job. Democracy is intact with public being shareholders.

Sounds Simple - Doesn't it.

Posted by Ms, 14th September 2006 9:57am

Lets speak the truth here, I remember when the Government told us we should be buying diesel engined cars as it was more environmently freindly. So when we all changed our cars we went for diesels. The loss in revenue was obviously huge so suddenly we are told that Diesel is actually worse for the environment than petrol. Hence we now have the highest diesel prices in europe. Strange how the other countries disagree with our Government isnt it?????????/ Call me cynic .

Posted by John Ford, 14th September 2006 7:20pm

I think that if the government put 1p on a litre of fuel every motorist would pay there way. Then abolish road tax so that it catches all the tax dodgers

Posted by Norman Clark, 17th October 2006 6:30pm

I thoroughly agree with Norman Clark and have been saying this for years. I would like to know why the government doesn't adopt this stragegy as the system would be much fairer to those that don't do a lot of miles. Why should someone doing say the average 12,00 miles a year pay the same as someone who may be doing 50 - 60,000 mile a year?
I'm afraid the government is only really interested in one thing, that is getting as much out of the motoring public as possible and using the funding elsewhere instead of on the roads and transportation in general. They have, after all, squandered away our North Sea resources and we are now one of the most expensive countries in the world for fuel, amongst other things.
They know as well as anyone with an ounce of sense that you cannot price people out of their cars. Motorists are easy targets and good earners for them!

Posted by Sid Weiner, 19th October 2006 4:58pm

These ridiculous fuel taxes serve only one purpose and that is to enable the government to continue to squander money. Is global warming real? Sure it is. Only problem is it is part of a natural cycle that cannot be stopped. No matter what anybody says. Maybe we have contributed to speed it up a little, but there's nothing that can be done to change that.
What has convinced me of this? Look at what the government has done with the billions of pounds it steals from motorists across Britain. Have they gone on a reforestation spree? No they haven't. In fact they want to build more polluting homes on land where forests once stood. Have they invested heavily on alternative fuel research? No they don't. Those pathetic wind farms don't count. The wind is either too strong or too weak to run them to the point of maximum efficiency. The ones near here are not moving most of the time for those very reasons. Besides, the technology has existed for hundreds of years (windmills) and the government doesn't spend anything to build them ... the power companies do. (I wonder if they get tax breaks for those things that they put on public land!)
The worst thing is that I have no option but to run my car. It would take me 2 hours to get to work and another 2 to get home on public transport. In my car, I manage to get there in half an hour. Same goes for my return journey. I need to spend time with my family! What is life if I couldn't!?
Here's what really gets me. We are forced to pay taxes as a penalty for using fuel. What alternatives are there??? If there was one, I would be the first to use it. At least there would be another option. The idea of punishing someone for using something is to encourage use of a different thing. We are basically being robbed!! The government has absolutely no idea what they are doing!! Further proof is that next week they will start to raise taxes because kids are getting drunk. How funny is that?? Now, instead of getting drunk, kids will start buying drugs and drinking all sort of dangerous things.

Posted by Walter Plater, 7th March 2008 10:43pm

Global Warming is far from the issue!! I firmly believe that it is a quick and easy way for the government to squeeze money out of the low earners of this country. I guarantee you that if a politician had to spend one month living on my budget they would understand just how hard it is. They would also understand that this constant fuel rise has a catastrophic knock on effect throughout anyone's monthly budget.

This time last year I never had to worry about how I was going to get to work, pay for food, pay for clothing etc. My fuel bill has risen from £25.00 per week to £40.00 per week.

Only 3 months ago I could buy butter for £0.43, and now it costs £0.83.

Clothes are so expensive that I now have to shop for clothes for both my son and I in second hand shops, whereas this time last year I had disposible income which could be spent in such a way.

When is the government going to wake up and realise that the people of "Great" Britain are falling, and they are falling fast.

They would be wise to remember Lennin who said "a country is only three meals away from revolution".

I cannot be the only person who is two meals short every day. One more and I will not be able to wait the 2 years for a General Election to get "back door" Brown out of office.

Posted by Carolyn Turmaine, 3rd June 2008 2:53pm

Global Warming is far from the issue!! I firmly believe that it is a quick and easy way for the government to squeeze money out of the low earners of this country. I guarantee you that if a politician had to spend one month living on my budget they would understand just how hard it is. They would also understand that this constant fuel rise has a catastrophic knock on effect throughout anyone's monthly budget.

This time last year I never had to worry about how I was going to get to work, pay for food, pay for clothing etc. My fuel bill has risen from £25.00 per week to £40.00 per week.

Only 3 months ago I could buy butter for £0.43, and now it costs £0.83.

Clothes are so expensive that I now have to shop for clothes for both my son and I in second hand shops, whereas this time last year I had disposible income which could be spent in such a way.

When is the government going to wake up and realise that the people of "Great" Britain are falling, and they are falling fast.

They would be wise to remember Lennin who said "a country is only three meals away from revolution".

I cannot be the only person who is two meals short every day. One more and I will not be able to wait the 2 years for a General Election to get "back door" Brown out of office.

Posted by Carolyn Turmaine, 3rd June 2008 2:54pm
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