March 12, 2008

With petrol prices crippling car owners across the nation, the notion we should be grateful that the chancellor has let us off without a fuel tax rise, is frankly risible.

Mr Darling, rather than expecting us to be pleased that you have put off the 2p rise in fuel tax, till October, why not talk to us about how you’re going to enable anyone to be able to afford to continue driving.

The price rises are hitting us at the pumps and the price increases in transport costs are making it harder for shops and restaurants to stay profitable. So how about a reduction in the rate of VAT that you charge on petrol, or the way the Vat is calculated?

Under the current system Vat is applied to the cost of the petrol and the tax already levied on it. This takes the cost of 91.5 pence per litre up to the current, eye watering, 107.9p. Vat is adding 16.4p per litre as you fill up.

If VAT was applied to the cost of the fuel alone it would amount to slightly under 5p. Taking more than eleven pence off the price of a litre of fuel and bringing prices back to the levels of three years ago. As oil prices rise so does the amount extra revenue that is raked in by Vat. Rather than charging us the double whammy of Vat on the already high road tax why not charge it to the price of the product itself and try to get the country moving again.

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