14:24 Mar 12 2008
Times Read: 844
This type of thing really makes me biting mad. It's even more frustrating knowing I can't do anything about it...
On Wednesday the Chancellor Alistair Darling will unveil the 2008 budget, and with it, a series of tax hikes on motoring. The government is still planning to press ahead with a 2p increase in fuel duty, to take effect from April 1st 2008, despite increasing fears over the state of the economy and new record oil prices being set each week. Oil prices reached a record $107.44 on Monday morning.
Figures from PetrolPrices.com show that the price of unleaded has shot up 18.1p per litre in the last year. At the beginning of March 2007 a litre of unleaded cost 88p. Both unleaded and diesel are at record highs - unleaded is now 106.1p per litre and diesel is 112.5p.
Despite the impact record prices are having on motorists, on the haulage industry and on inflation, it's likely believe that the Chancellor will push through the price rise anyway. Many believe he is scared of being labelled as a hypocrite – this year's budget has been billed as the 'Green Budget', and cutting fuel duty would not be in line with the overall message the government wants to convey.
Other methods of taxing motorists are expected to be announced too, for example taxing gas guzzling cars out of existence, by adding a 'showroom' tax of £2000 to the most heavily polluting cars, and colour coding tax disks by carbon emissions. This would make it easier for local councils to identify and penalise high polluters, possibly by charging 4x4 owners more for parking.
But why does the Chancellor need this extra revenue? Rising fuel prices caused by oil price rises have been bad for motorists, but good for the government. Compared to the Pre-Budget Report in October, figures suggest that the Treasury has received an extra £1.2 billion in revenue because of the tax on North Sea oil. This means Mr Darling could easily afford to scrap the 2p increase, which estimates suggest would cost £1 billion.
If the Chancellor doesn't scrap the increase, and the conditions in the economy and the oil market continue, pump prices will hit £1.50 a litre this year - the equivalent to well over £6 a gallon. This would have a catastrophic effect on motorists, the haulage industry, and therefore inflation and the country as a whole.
Motorists across the UK are now having to adjust their driving habits because of the price rises - many now take fewer non-essential trips, have switched to smaller or more efficient cars or drive slower to get the most out of their tank. Green lobbyists see these changes as evidence that hitting motorists financially is the only way to curb carbon emissions, but it's possible that going ahead with the 2p fuel duty rise and continuing to target motorists could cost Labour much more than a few pennies at the next election.
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Basically, along with eveything else getting taxed and rising in the UK, the government is pricing us out of the country. The cost of living is rising at a ratio of approximately 8:1 to the average salary - meaning inflation is applying to costs but not to wages. It used to be that after paying the government and essentials you'd be left with about 60% of your wages for yourself. Now, it's more like 13%.
Our local petrol station now charges 107.9p per litre for petrol and 115.9p per litre for diesel. That was the price yesterday (tuesday). It's gone up 2p per litre in the last 3 days.
If I didn't hate hot sun I'd be seriously tempted to move to Gibraltar - 64p per litre and 40% less tax on average.
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