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In the now locked thread about oil prices there was a general view that if oil prices rise the exchequer will benefit. Now I know VAT is levied on fuel at 17.5%, but isn't actual fuel duty a fixed amount (roughly 49p per litre ULSD/ULSP) and not related to the pump price? So apart from VAT, which is on most things, not just fuel, the exchequer won't actually gain a great deal from oil price rises. If we reduce the amount of fuel we use because of the price rises it's possible it will even lose revenue. Or am I missing something here?
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VAT is charged on the Tax element as well. Incredible I know, but it is (where exactly is the value added in fuel duty????). So, yes, every time fuel goes up the exchequer collects more money.
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RichardW
Is it illogical? It must be Citroen....
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OK, so the exchequer gets VAT on the whole price, but duty itself is the same whether the pump price is 51p or 51 pounds per litre. Anyway I just did some sums. The amount gained by the treasury from a 10p rise at the pump is 1.7p per litre in VAT. But if that price rise (let's say to 90p a litre) meant I cut back and used one litre less per week, the treasury would lose 49p in duty, and almost 14p in VAT. If I ended up using 40 litres a week after making the litre saving the treasury would earn an extra 68p in VAT on those 40 litres, an overall gain of 6p in a week. If I cut back by two litres it would actually lose money overall despite the 10p price rise. It's finely balanced if you ask me.
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But who really uses the car for useless journeys? I suppose I make a special journey to go 500 yards to Tescos once a fortnight. Otherwise, there's not an inch of tarmac I drive for 'fun'.
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I'm reminded how much more slowly people (including me) were driving during the fuel protest week, and how much longer their reserves of fuel lasted.
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And you put up with it for a week, following which... normal service resumed.
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hey dont you drive for fun? no. oh what a surprise.
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Phoenicks,
Take the snide remarks elsewhere.
DD.
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Apart from the tax at the pump, there is something called Petroleum Revenue Tax which is levied on North Sea oil production.
So when the price of crude goes up Gordon laughs all the way to the bank (of England).
IIRC, his budget was based on $27 a barrel and the $10 average increase will give him a couple of billion extra quid.
Against which the extra VAT at the pump is petty cash.
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Always found the Catch 22 situation the government created for themselves a little amusing (until they rectified it by increasing duty).
Under EU law, car manufactures were obliged to improve the economy of their cars - I think that it might have been to do with Kyoto. As a result (and these figures may be way out) I think that there was a 20% increase in fuel efficiency (over the whole range of a manufacturers cars). As a result HMG lost 20% of its revenue through fuel therefore Duty goes up to cover the lost income.
now things have got so expensive at the pump, manufacturers are under increasing pressure from their customers to make ever more efficient cars, thus losing more money for HMG, resulting in increases in Duty, leading to manufacturers getting even more efficient, leading....... etc
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