Osborne faces the fire over fuel duty
Peter Hoskin 9:01am
Will fuel ever stop being a cause of political discontent? It was the fuel protests of
2000 that first tarnished Blair's electoral allure, according to some of the advisors who were around him at the time. It was a question about petrol prices that provided Gordon Brown with one of the most awkward moments
of his premiership. And it was the same issue that punctuated the build-up to George
Osborne's Budget and Autumn Statement last year, and now to next month's Budget too. The Mail, the Sun, Tory backbenchers and others are once again lobbying the Chancellor to act.
Of course, there are clear reasons why fuel is always such a hot topic. For starters, its price fluctuations are felt by millions and register, in plain black and white, on their bank statements and credit card bills every month. And then there's the extra fact that it is taxed so high. With VAT on top of fuel duty, the effective tax on diesel, for instance, is around 140 per cent. It's pretty much the highest level in the EU, as the Mail points out this morning. But even putting the comparison aside, it's a politically toxic levy. For every pound spent by motorists on diesel, almost 60p goes to the Exchequer.
No doubt this helps explain why Osborne appears to more resistent, this time, to cutting fuel duty. Judging by the tone of his remarks at the weekend, the 3p rise in duty scheduled for August will remain — after which point, his 'fair fuel stabiliser' will kick in anyway. As he put it, 'fuel duty is six pence lower today than it would otherwise have been so I have absolutely shown a willingness to respond to the international situation and we have taken action this year.' He's probably also reminding himself of this ONS report, from November last year, which showed that the 'proportion of spending on petrol and diesel received by Government' has generally been falling since 2004 — and has fallen further since the coalition took over.
But I do wonder whether Osborne might surprise us still. Thanks to the slippage of his fiscal plans, and the predations of the credit rating agencies, the Chancellor has much less space to operate in than he would have hoped. But the strategist in him will know that, if space be found, operating on fuel prices will probably produce some of the strongest political results.
Previous
telemachus'
February 28th, 2012 9:08am Report this commentSo he cannot have any excuse for more of his savage cuts targetting the poor rather than his rich city friends
TomTom
February 28th, 2012 9:11am Report this commentIt is too late. They take huge levies from motoring but fail to repair roads. The whole cost of congestion and fuel taxes now infuses prices of food, energy, goods and business.
The whole economic model of taxing the Productive to give inflation-linked rises to the Idle is beyond reform. It must collapse just as it always has in Weimar, and in every Socialist Paradise on earth.
Osborne is simply the man on the bridge when the rocks found the liner.
oldtimer
February 28th, 2012 9:14am Report this commentTalk of the "fair fuel stabiliser" is typical of the double speak of politicians. There is nothing "fair" about the huge taxes on fuel. It is extortion. And it impacts nearly every other cost in the economy, directly or indirectly. That is why successive Chancellors have pushed taxes on fuel up to and beyond the limits of tolerance by the taxpayer.
Russell
February 28th, 2012 9:24am Report this commentI think 2 or 3 pence off a £1.50 litre of fuel or 2.5 pence off vat on goods costing £1. Both are bad choices compared to increasing the personal allowance to £10,000 (worth £400 per year).
Put more cash in WORKERS pockets and let them decide how to spend their money.
In fact move vat up to 25% on luxury goods and increase the personal allowance to £15,000 (a further £1000 in WORKERS pockets to spend or save as they want).
Paying for any reductions must be paid for by reducing massive public spending.
As long as its 2.5million public servants unemployed, that's a big saving for the people who pay for them, taxpayers.
Unemployment pay is a lot less than public sector employees pay.
Pot Head
February 28th, 2012 9:26am Report this commentFuel duty is also the easiest tax to reduce the amount you pay. Just drive less and more slowly in more fuel efficient vehicle. And hey presto, you've got yourself a tax cut.
And it works in the countryside too.
Seasurfer1
February 28th, 2012 9:28am Report this commentGeorge's problem in winning the next election is upsetting all the Women who will lose Child Benefit because of the Higher Tax Position they will find themselves in. The Middle Class Higher Tax Payer will not support the Tories.
Another own goal is Barclays who will now leave the UK as their Company Registered place for Tax Purposes. The Tories are doing a Good job at getting rid of the City as a Wealth creating Centre.
Mirtha Tidville
February 28th, 2012 10:04am Report this commentOf course fuel must rise and must go up even more....how else are we going to pay for the announced today free HIV treatment for immigrants/visitors/spongers/dross..
I despair
Sean Haffey
February 28th, 2012 10:18am Report this commentI have written several times before that the proposed price changes are off by an order of magnitude. (see for example my blog at sean-haffey.blogspot.com/2011/03/50p-to-set-us-free.html).
The government should take 50p off the duties and taxes on fuel to act as a spur to the economy. Everyone would benefit from this financially: inflation would drop dramatically; travel would become affordable for those who can't afford it today; businesses in danger of going bankrupt would be given a new lease on life; employment would be positively affected; unemployment would be down.
The 50p could be clawed back 1p a month, (so getting back to current levels after about 4 years) but would give an immediate and much-needed boost to the UK economy.
Harry Tuttle
February 28th, 2012 10:19am Report this comment@Pot Head, 9:26am
"And it works in the countryside too."
Not as well as filtered red diesel, matey.
Simon Stephenson.
February 28th, 2012 10:25am Report this commenttelemachus' : 9.08am
Regrettably, Osborne's "rich city friends" are so small a proportion of the total population that raising further taxes from them will contibute little more than a pin-prick to reducing the imbalance between the State's revenues and its expenditure. Despite what Labour politicians claim to the contrary, there is no practicable way of closing this imbalance that doesn't involve a combination of:-
1. Reducing the cost of public services that are consumed, free, by the bottom 90% of income earners.
and/or
2. Increasing the amount of tax revenue collected from the bottom 90% of income earners.
The never ending denial by the left of the realities of what has to happen is a cruel political stunt that is aimed more at self-preservation than it is at promoting the wellbeing of the general public.
Mark M
February 28th, 2012 10:26am Report this commentAccording to DECC figures, the UK has some of the lowest petrol and diesel prices in the EU. Of course, that's pre-tax. We have the highest prices post-tax.
THAT is why fuel taxes are so toxic, because they are already far too high. Our fuel costs around 15p per litre more than it would if we had EU average tax rates.
Simon Stephenson.
February 28th, 2012 10:47am Report this commentTo all those who believe that unfunded tax cuts will lead to greater economic growth
What you need to establish is that there will be no increase in precautionary saving in anticipation of tax rises seen as inevitable in the future - in other words that the tax cuts will not be seen as a short-term, politically motivated, deferral of liability which will need to be stumped up at a later date.
I'm convinced that the prevailing public opinion is that public-sector deficits will never be closed either by reduced spending, nor by economic growth outpacing spending growth, and that therefore the general public will inevitably be called upon to pay higher taxes. Without a clear demonstration of political intent to reduce the scale of the public sector, it's difficult to see how tax cuts can have more than a minimal upward impact on aggregate demand.
telemachus'
February 28th, 2012 10:53am Report this commentSimon Stephenson.
Part of all this is due to perceptions and when those on the Chalk Farm Estate read about the HSBC boss trousering 7,200,000 then they wonder why the cannot buy shoes for the kids
I am not left as in Diane Abbott sending her children to private schools but reasonable.
TrevorsDen
February 28th, 2012 10:55am Report this commentWe drive everywhere so we are prsoners of fuel duty.
It is absurd in the extreme to think that the govt, any govt can throw away the revenue it generates - especially with a massive massive deficit to get rid of and when will people realise that after the deficit has been removed we need to build up surpluses to pay the debt down.
This is the true meaning of austerity.
If fuel taxes are too high then what - more income tax more VAT?
The nation paid itself masses of money it did not have, and now it wants to give itself even more back?
Sean Haffey
February 28th, 2012 10:57am Report this commentSimon Stephenson wtote "To all those who believe that unfunded tax cuts will lead to greater economic growth".
The 50p a litre tax and duties cut I have proposed would have significant financial benefits to offset the loss of income: more corporate tax paid by companies that would otherwise have gone bankrupt; income tax and NI paid by their employees; reduced unemployment benefits; more people able to afford travel to work and hence improved employment prospects overall; truck drivers travelling to Europe filling up in the UK rather than Calais (or wherever) and hence paying duty to HMRC rather than another government; much reduced inflation, supporting a cap on public sector pay.
It really is win-win-win.
TomTom
February 28th, 2012 10:57am Report this comment"Just drive less and more slowly in more fuel efficient vehicle"
That should be fun for deliveries ? Pot Head is addled, why does he think fuel is for pleasure drivers only ? Doesn't he engage in business or logistics ?
Bob Dixon
February 28th, 2012 10:57am Report this commentFor God's sake cut taxation to be paid for by reductions in Government spending.
whatawaste
February 28th, 2012 11:05am Report this commentThe fuel duty ratges are high but the revenue raised as a proportion to total revenue is only a measly 8% or so. Putting the rates back to levels 10 years ago would cut the revenue raised by £6 bn which in context of total debt is peanuts. The politicians only want the roads freed up for their ministerial cars - I believe their only ideology is me me me...
telemachus'
February 28th, 2012 11:14am Report this commentSimon Stephenson.
February 28th, 2012 10:47am
Oh dear Simon you should stick to reading the runes.I am of the tax them until their pips squeak philosophy when it comes to the rich but taken with your initial statement that you wish to tax the poor your philosophy will lead to social disaster
eyesee
February 28th, 2012 11:16am Report this commentOsborne says he has no money 'to give away', he says he cannot afford to forego the fuel duty rise. Has he addressed waste in government spending? No. Has he stopped using Consultants to do civil servants jobs (both getting paid of course)? No. Has he stopped politicians creating Quango's at great cost, which then hire their own Consultants to do their job? No. Has he cut back on lunacy in governemnt, such as green taxes, subsidies for wind farms, funding for nutcase left wing groups, nearly always involving outreach? No. has he stopped funding arms procurement in Africa and the Indian space programme? No. That is how you balance the books -first stop wasting. When government does ONLY what the people want it to do, most taxes can vanish. And it really would be most. Surely Treasury Boy knows that the economic advantages (and increased tax take on activity) would be much greater if people could still afford to go places in their cars, sometimes (Lord help us) for pleasure. All our goods could be cheaper, due to reduced transport costs. The only blot on such a vision is the need to meet the insanity of the left, that holds sway. You think they want to save the planet? Reduce emissions? No, the increased costs are just a way of destroying the capitalist system from within. so well done Cammy, well done Ozzy, for being so 'on message' with the leftist plot.
Simon Stephenson.
February 28th, 2012 11:40am Report this commentSean Haffey : 10.57am
Part 1
If it was really win-win-win, you can rest assured that it would be being done. It is, like everything else however, win-win-lose-lose, and the calculation is whether or not in net terms is it something worth doing.
Simon Stephenson.
February 28th, 2012 12:10pm Report this commentSean Haffey, telemachus
I've tried to post 50-75 word responses to your comments, but these have been turned down. Sorry, I'd have liked to continue our discussion, but trying to do this one sentence at a time I consider to be pointless.
alexsandr
February 28th, 2012 12:30pm Report this commentdont have a choice with cars. rail to meetings in london is stupid expensive (£75 for 200 mile round trip). And cooking oil is in asda under £1.30 a litre. has to be worth a look for those with diesel cars!
OscarIndia
February 28th, 2012 12:31pm Report this commentThe reason govt income from fuel duty has been dropping is simply because fuel (diesel now almost £7.50 a gallon!) is so cripplingly expensive that people are driving less and less. This is brutal and pernicious tax on rural dwellers, particularly the elderly. God I wish we had a Tory government.
strapworld
February 28th, 2012 12:31pm Report this commentBob Dixon hits the nail on the head.
Just how many jobs have been axed from Government Departments? How many quangoes have gone? How many chiefs of Quango's received a hefty pay off and then moved to another public service (??) job.
Fuel duty is a scandal, but no Government will cut it until major protests return to our roads. You see the British do not act like their continental neighbours. More the pity.You can just imagine the faces of Messrs Osborne and our brave man of steel Prime Minister, if the Haulage Companies this time assisted by the great British public made a big issue of this robbery.
Sean Haffey
February 28th, 2012 1:11pm Report this commentSimon Stephenson. I share your frustration with this site. I'd just point out that saying "If it worked it would have been done" is an approach that frustrates all progress. Maggie wouldn't have stood for it.
justathought
February 28th, 2012 1:37pm Report this commentSimon Stephenson and Sean Haffey
I share your frustration at this system that has been introduced by the administrator. They are simply now allowing sufficient time to post a sensible comment. Most people will give up posting here if this is not sorted out soon. What then for Coffee House?
telemachus'
February 28th, 2012 1:53pm Report this commentSimon Stephenson.
February 28th, 2012
Which is why you folk will always lose the argument
WIlliam Blakes Ghosts
February 28th, 2012 2:06pm Report this commentHow do you expect the parasites in the Westminster freakshow to squander our money by donating it to the latest foreign begging bowl or the latest scaremongering whizzo wheeze (e.g. climate change) if the Chancellor doesn't screw every penny he can out of us?
All that has happened is we have gone from Brown's 'Rotten Government' to Cameron's 'Parasite Government'. But I suppose when something is rotten it attracts parasites?
Dimoto
February 28th, 2012 2:25pm Report this commentThat's a new one telemachus - "the car-driving poor", has a ring to it.
Would they be "the large-engined, probably German made, car-driving poor " ?
Anyone who thinks we have the most expensive fuel in Europe, obviously never goes to Europe.
Fergus Pickering
February 28th, 2012 4:46pm Report this commentWho are these people who cannot buy their children shoes, telemachus. Are they the same people who watch their children starve. You must live in a different neck of the woods from mine. Where DO you live? Somewhere frightening, like Tower Hamlets or Oldham?
Anne Allan
February 28th, 2012 5:04pm Report this commentFrom memory, with VAT the government actually takes 78p from every pound spent on fuel.
TomTom
February 28th, 2012 6:05pm Report this comment"ou must live in a different neck of the woods from mine. Where DO you live? Somewhere frightening, like Tower Hamlets or Oldham?"
What's wrong with Oldham you old soak ?
ricki doyle
March 3rd, 2012 6:56pm Report this commentIts so unfair the price of fuel that we need, Everything else in return goes up. Lower Fuel means lower food etc more money for people to spend the ecomany will be on the rise Get A Grip osbourne!
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