Cut in fuel tax would `create 180,000 jobs'
New research has shown that a small cut in fuel duty would create jobs and boost the economy, as Robert Powell reports...
In 11 days George Osborne will outline to the nation how he intends to raise, and spend, money to spend on public projects over the next year. And fuel taxation is one of the many subjects that will spark debate.
As it stands, Mr Osborne is set to approve a 3p rise in fuel duty, taking it from 57.95 pence per litre (ppl) to 60.95ppl from August.
However, with petrol and diesel prices now at record highs of 137.79ppl and 144.92ppl respectively, the Chancellor is under pressure to not only reverse this rise, but also to implement a cut in the tax instead.
180,000 new jobs
The FairFuelUK campaign is leading calls for the Government to slash fuel duty. Last week the group staged a FairFuel Day outside parliament in an attempt to lobby MPs and push the issue of rising motoring costs up the political agenda.
The protest included the delivery of a key report to 10 Downing Street.
Conducted by the Centre for Economic and Business Research (CEBR), the report states that even a small cut of 2.5p per litre would boost the economy and create 180,000 jobs within five years.
The data also forecasts that such a duty drop would not eat away at the Treasury balance sheet, as tax takings from an increase in economic activity would make up for the lost fuel duty revenue.
Other factors
Pressure from the public, MPs and FairFuel UK managed to secure a 1ppl cut in fuel duty in the 2011 Budget. However, in the months following the move, many motorists were sceptical as to whether the tax cut really materialised at the pump.
Fuel duty makes up around 60% of the price motorists pay at the pump – the highest level in Europe. However the cost of oil – buoyed by market traders and instability in the Middle East – also plays a big part in keeping fuel prices high.
Peter Carroll of the FairFuel UK campaign, said: “There have always been two strands to our campaign: the first is to get fuel duty down. The second is to get some competitiveness and transparency in the market.
“When oil goes up, prices go up. When oil goes down, prices stay up. When there was a 1p cut from the Government, most people didn’t see it. [The market] needs to be challenged. But we can’t do that as individuals, the Government should do that on our behalf.”
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I don't think fuel is taxed enough. Cars and buses should be a priviledged luxury only for the highest paid people in the country. That way the roads would be far quieter, there would be no need for traffic lights. No traffic jams and the air would be cleaner. People would be forced to take employment within walking distance of where they live and that would end obesity as everyone would get daily exercise. Kids would be far safer going to and coming home from school because there would be less risk of health problems for them. Quality of life would be far better overall if fuel was taxed far higher than what it is now.
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The real problem is that duty is a fixed value, rather than a percentage value, which means that irrespective of whether fuel goes up or down, the duty remains the same. On the other hand, VAT is a percentage value, so if the cost of fuel goes down, so does the VAT. This is why the government has decided to clamp down on cheap alcohol, because the cheaper it is, the less VAT they collect. So, we know that the taxation of fuel is totally unfair, because the value is absolute, rather than percentage based. Then again, Council Tax is unfair due to a similar reason. If you have two people living in a terraced house, they pay less than two people living in a more valuable semi, or two people living in an even more expensive detached house, or bungalow. Simply put, Council Tax is a tax on living space, and the more space you have, the more you pay. Taxation is a dirty word, simply because in many cases it is unfair, in that you are penalised for being better off. I do feel sorry for people who find themselves in the higher tax bands, and who have to hand over much more of the money they have earned. And all because of generations of MPs who couldn't stop squandering cash on hair brained schemes that they thought would benefit the UK.
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I am sure that the government would listen to the fair fuel campaign, if the fair fuel campaign were to make a donation to tory party funds!
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05 April 2012