£ to Burn (UK Petrol Prices)

Member Name: richardandkaye

Product:	UK Petrol Prices
Date:	17/09/00 (27 review reads)
Rating:

Advantages: What is the answer ?

Disadvantages: Let here peoples Opinions

The price of Petrol / Diesel is a very emotive issue. Do we pay to much for our fuel ? On the face of it yes but is that the case ?

I am not looking at this question from any specific Political Party angle , I am not a Labour Voter but that doesn't matter here.

The basic Economy of the UK is a simple Income & Expenditure statement , we are all asked to do one by our Bank when we need to borrow money. Our Taxes , Direct (Income and National Insurance) and Indirect (VAT , Fuel Tax , Excise Duty) need to balance our Spend on the likes of Health , Education , Defence and Social Services.

In times of recession Expenditure invariably exceeds Income and in times of boom , the theory is that Income exceeds Expenditure. We are now in the latter and such a surplus exists. Everyone is saying that the Government should use some of this surplus to reduce fuel tax , OK thats fine but when the next recession comes , we will have less money in the piggy bank to use and the National Debt srirals out of control. At this time the Annual Interest Bill grows and services need to be cut or taxes raised just to standstill.

So what is the answer , if they cut Fuel Tax , the Government will still need to raise money to balance the books so do they increase Income Tax ? But then everyone is paying even people who don't use fuel. This is the whole beauty of Indirect Tax over Direct Tax. With Indirect Tax , you only pay if you use something , with Direct Tax , everyone who pays Income Tax pays for the benefit of the people that use it.

So by increasing Income Tax , someone who walks to work , who doesn't smoke and doesn't drink is worse off whereas if Income Tax is reduced and Indirect VAT Tax / Excise Duty and Fuel Tax is increased or stays the same , only people who drive / smoke or drink pay. For the latter two , these are your own decisions and could in theory be reduced or stopped.

This again brings us back to Fue
l Tax. Some people have to use Vehicles to carry out their work such as Hauliers so is it right that they are put out of business as a result of
the higher fuel prices than on the Continent making them non-competitive ? No ! So what is the answer ? Harmonisation of prices across Europe , nice idea but noting that most of Europe pays higher Income Tax than us , do we want to fit in with that ? No !

This is effectively the whole issue re a common currency - creating a federal Europe where our decisions are outside of our control.

I think the only thing that can be done is a compromise by all , some relaxation is Taxation Policy on fuel but an acknowledgement that this needs to remain "fluid issue" (sorry about the pun)effectively constantly under review in the light of Oil Prices and the overall Econimic position of the Country.

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