I'm Revolting! (UK Petrol Prices)

Member Name: marandina

Product:	UK Petrol Prices
Date:	19/05/07 (252 review reads)
Rating:

Advantages: Lower duties on petrol would mean greater freedom

Disadvantages: I'm sure there's always an excuse to raise yet more tax.

For anyone’s that’s read any of my previous postings about the wonderful world of taxation you will have realised by now that I am dull in my view on this subject but consistently dull (to be fair) in my ongoing gripes about UK taxation. Basically, we pay too much tax and the tax that we pay is not used particularly wisely by any government let alone the present incumbents of our political favour (Lord help us). Perhaps the jewel in the crown of underhand, sneaky and downright unfair taxation would be fuel levies and with a recent report heralding the fact that the average price of unleaded petrol in the UK has risen above 96 pence per litre for the first time since August last year then it‘s time to elaborate on why this situation remains so frustrating.

As far as the background to the latest increase in price then it’s all about the rise in crude oil. With the seasonal increase in demand in the U.S. magnifying the impact, unleaded has now reached an average of 96.04p per litre whilst my own tipple of diesel now averages 96.84p a litre. Generally, the benchmark for oil prices is $70 at the moment with Brent crude trading at just over that figure earlier in the week having hit an eight-month high. Oil prices are sensitive to world events, recent examples being the ongoing uncertainty around the problems in the Middle East and recent speculation about possible vulnerable oil supply issues in Nigeria ahead of governmental elections. So from this we know that oil prices can go up or down according to global, political stability/instability with the subsequent knock on effect with oil prices.

One of the biggest variables in terms of petrol prices is the application of duties according to where in the world the commodity is being sold and which government is in power. In our own case, we have a government who prefer to apply indirect taxation on the electorate as opposed to the more front-page worthy direct taxation such as income tax. Basically, in the UK fuel tax is seen as a general duty which goes into the collective pot to pay for all sorts of things including the upkeep and maintenance of the road network. Over the last decade and a half, the duty on fuel has risen steadily with a sizable increase taking place between 1993 and 1999 courtesy of the Conservative government of the time who introduced the Fuel Price Escalator. From being amongst the lowest priced in Europe, between the then Tory power-mongers to the subsequent Labour government, prices rose as did the ratio of tax to actual price of fuel. By the end of the millennium, this ratio has gone from 72.8% to a staggering 81.5%. 2000 and beyond saw mass protests as our motorways were brought to a standstill be rolling blockades and the cutting of off supplies, albeit the controversial fuel escalator was abandoned in 1999. Much of the anger came from haulage operators who felt the pain of high prices and an increasing differential with operators in Europe who didn’t have the same level of taxation and so could run their businesses with less pressure on profit margins. It got to the point where the poor old British lorry driver simply couldn’t afford to eat anymore having paid out for fuel to carry out his duties. Since then, plans have been put in place to make sure that those kind of blockades don’t happen again and people can continue to purchase fuel and not be forced to eek out what’s in the tank whilst worrying where the next fill up will come from.

The variables that influence the Global price of oil are still prevalent now. Voracious economies in China and India continue to drive the price up on the back of their insatiable demands from industry, the Middle East remains as unstable as ever with the ongoing situation in Afghanistan, Iraq and Iran and oil supplies in Texas remain vulnerable to extreme weather potentially stunting supplies and driving up prices that way. In a world that gets smaller by the day, we simply have no choice but to buy fuel. Anyone that kids themselves that they can get around all day, every day on a bicycle has obviously been watching too many scenes shot in Beijing or lives and works in a very small town. We need our cars or, at the very least, need public transport to get around. Industry has to pay for fuel to move its goods around the country and so we are faced with a cost that’s virtually impossible to avoid.

The alternatives to high levies on fuel are obvious. A more transparent rate of direct taxation such as income tax, alternative indirect tax levies on luxury goods like cigarettes or alcohol or even (God forbid) a review of the Public infrastructure with a view to stripping out wasted Billions in ineffective central and local government process and support structures. Yes, it’s about time we had a sensible review of where taxation goes on the whole and how it’s frittered away by various government departments. I can’t believe for a second that the Public sector operates anywhere near maximum efficiency and maybe a project led by a private sector consultant would bring in massive cost savings without even looking at the archaic social security system that costs way more than we can actually, realistically afford (hence the ticking, pensions time bomb which will lead to ever older age triggers before it kicks in). It’s time we woke up and smelled the coffee on this one and stop accepting the status quo of high petrol prices and a relatively high tax burden that increases year on year. Sure, you can shop around and look for the cheapest fuel at sites like www.moneysavingexpert.com and www.petrolprices.com but then are you really prepared to travel miles just to get fuel a penny cheaper per litre? We also thank the supermarkets for keeping prices down even if this is all about increasing footfall through their front doors but the underlying trend remains worrying and we should do something about it. You can protest through your political vote, make your feelings known at various sites on the Internet and even alert the media who already support the notion of reduced petrol prices. We live in an economy that’s built on enterprise and entrepreneurship and not a social comfort blanket meant to cosset those who don’t want to contribute. As such, our system of taxation should reflect and support this and not continue to penalise the working population.

Thanks for the read.

Mara.

Note: visit http://img.thisismoney.co.uk/calculators/calcPetro l.html and you can use a calculator that will work out the impact of a rise in fuel duty on your annual income based on your annual mileage. You may be surprised!

Summary: My view of rising fuel levies