Government's Planned 2p Fuel Duty Rise 'Unjustifiable'
Posted on: Saturday, 17 May 2008, 00:00 CDT
A leading business group has attacked the planned 2p rise in fuel duty this autumn, saying it is unjustifiable after the Government raked in a pounds505 million fuel tax windfall in just six weeks.
From the start of the tax year on April 1 to today, the Government has received pounds505 million in tax due to the rising price of oil - the same as what will be raised by the proposed 2p fuel duty rise in October during this tax year, according to the British Chambers of Commerce (BCC).
Its fuel duty model takes account of monthly fluctuations in fuel (petrol and diesel) sales, the pound/dollar exchange rate, the price of Brent Crude oil and North Sea oil production.
In the March Budget, the Government based its assumptions on oil revenue at 83.8 a barrel. Since then the cost of oil has rocketed, reaching a high to date of 126.40 a barrel.
This increase in the price of oil has increased the profits of the oil companies that are subject to North Sea oil taxation and the price of fuel at the pump upon which consumers pay VAT.
The BCC model estimates the increase in the Government's North Sea Oil tax revenues will be pounds390 million of the pounds505 million windfall, and the remaining pounds115 million is the extra VAT on fuel at the pump.
David Frost, director general of the BCC, said: "The rising cost of petrol is hitting everybody hard, not just businesses. Seeing the fuel gauge barely move when you put in pounds20 is frustrating and only going to get worse.
"While the Treasury estimates on what it would bring in on fuel tax are woefully out of line with reality, this pounds505 million windfall in less than two months must surely rule out the 2p rise scheduled for October. It is simply unjustifiable."
(c) 2008 Western Morning News, The Plymouth (UK). Provided by ProQuest Information and Learning. All rights Reserved.
Source: Western Morning News, The Plymouth (UK)
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