General Chat

Today, the Chancellor George Osborne and his side kick, Danny Alexander the Chief Secretary to the Treasury, have been doing the rounds to promote, that they have made it clear to the petrol and diesel distributors - that they must reflect the fall in oil prices in the amount charged to customers at the pumps.

What neither of them commented on, was the affect lower oil prices, will have on the revenue, the treasury receives from the duty and VAT on petrol and diesel.

In recent weeks, It has been widely reported, that the Chancellor needs to find substantial amounts of money to meet his deficit reduction target, a reduction in the income that the Treasury receives from, the duty and VAT on petrol and diesel, will not help him achieve that.

I wonder where, any shortfall in revenue, resulting from lower fuel prices will come from, an increase in fuel duty maybe - what do you think?

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”.

*Jean Baptiste Colbert (French Economist & Minister of Finance under King Louis XIV of France. 1619-1683).

Dermot - excellent choice of quote :-)

Fuel Duty Rate on Unleaded petrol is a fixed amount. Last year's increase was cancelled and it remains presently £0.5795/litre
(Would someone care to confirm, please)

If so, any change in price at the pumps would only have an affect on VAT?

The current economic climate and the improved efficiency of modern engines are surely reducing HMG's tax revenue from fuel. Maybe a marked drop in price might increase sales (and thus tax revenue), but by how much?

http://www.dailymail.co.uk/news/article-2571988/Fuel-tax-burden-UK-worst-Europe-triggering-calls-Osborne-cut-duty-3p-Budget.html

As the Chancellor cannot determine, well not yet, the price charged at the pumps, I am curious as to why he and his side kick made this intervention.

I notice that he didn't offer a reduction of the basic 69p in tax on a litre of petrol, but that the retailers should forgo some of their profits.......

.......this 'green' thing doesn't appear to be working, does it?........

Cars using less fuel = less government profit
Light bulbs lasting longer = less government profit
Government funding public transport = less government profit

etc etc

Ha! Not in Oz. Yet another tax being added on this month.

:-(

:-P :-P :-P :-P

the cheapest petrol price I have seen at the pumps lately is £1-21p.....the norm was £1-24

Fuel tax revenue is based on volume, not value, something that good old Gordon Brown used to exploit year after year after year until the public got wise and voted his party out.

On the other hand fuel VAT, whilst it is value based, produces far less revenue, only around 15% of fuel revenue is collected this way so the impact of price changes is small.

Retailer markup is the smallest of all, often amounting to as little as 5p per litre.

It is true that green taxes can be counter productive in revenue terms. Whilst not strictly a green tax, tobacco tax is a good example. Have you ever thought why the annual increase is always a rather odd amount? It is calculated to ensure that the annual revenue remains approximately constant, irrespective of the year on year reduction in consumption.

InspectorGreenPen - I found what you said in your last paragraph quite interesting.