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Greg Pope · 27-06-2008, 08:59

There may well be a good case for reducing fuel duty at the moment but we should consider the facts before the myths become accepted as fact. Fuel duty is not a proportion of the price of a litre of fuel, it is a flat rate so the government does not get extra income from rising prices; in fact it gets less income as people use less fuel as prices go up. Similarly, talk of VAT windfalls are greatly exaggerated: people broadly have fixed spending power so if they are spending more on fuel they are spending less on other things; when VAT income from fuel rises VAT from other goods tends to fall. Also, businesses (including hauliers) can reclaim the VAT spent on fuel.

Rising fuel prices are not a British phenomenon but are being caused by demand (particularly from China and India) outstripping supply. For the record, UK petrol prices are now slightly lower than those in France and Germany.

Personally, I think that there is a case for scrapping the fuel duty escalator or, at the very least, putting off the planned increases in the autumn. I'm also opposed to the proposed VED changes and I met with the Chancellor only last week to discuss both these issues.

27-06-2008, 08:59	#15
Greg Pope Member Join Date: Mar 2006 Posts: 65 Liked: 0 times Rep Power: 0	Re: fuel how the government can help There may well be a good case for reducing fuel duty at the moment but we should consider the facts before the myths become accepted as fact. Fuel duty is not a proportion of the price of a litre of fuel, it is a flat rate so the government does not get extra income from rising prices; in fact it gets less income as people use less fuel as prices go up. Similarly, talk of VAT windfalls are greatly exaggerated: people broadly have fixed spending power so if they are spending more on fuel they are spending less on other things; when VAT income from fuel rises VAT from other goods tends to fall. Also, businesses (including hauliers) can reclaim the VAT spent on fuel. Rising fuel prices are not a British phenomenon but are being caused by demand (particularly from China and India) outstripping supply. For the record, UK petrol prices are now slightly lower than those in France and Germany. Personally, I think that there is a case for scrapping the fuel duty escalator or, at the very least, putting off the planned increases in the autumn. I'm also opposed to the proposed VED changes and I met with the Chancellor only last week to discuss both these issues.