RMI accuses Treasury of "spin over fuel prices"
"Treasury officials are trying to spin their way out of the current debate over fuel duty by suggesting that they are giving £4 billion back to the motorist by deferring previous duty increases," said Brian Madderson, RMI Petrol Chairman.
On the 24 February The Financial Times stated that 'faced with a virulent media campaign and public protests at Westminster this month in favour of fuel duty cuts, the chancellor’s aides say he has provided more than £4bn to help motorists and cannot afford anymore.'
During the Coalition Government’s term of office the net duty rise on fuel can be calculated at + 1.76 pence per litre (ppl). VAT has risen from 15 per cent in 2010 from to 20 per cent in January 2011. When these rates are applied to the increasing fuel prices it shows the Government has already taken £4 billion from the taxpayer.
Average UK retail fuel price comparisons
12 May 2010: Unleaded Petrol 121.6ppl and Diesel = 123.1ppl
7 March 2012: Unleaded Petrol = 138.0ppl and Diesel = 145.1ppl
(Experian Catalist data)
The Treasury will continue to benefit from this VAT “windfall” at the rate of £250 million for every 5ppl rise at the pumps. A “perfect storm” of adverse factors have been ramping up wholesale prices with both petrol and diesel now hitting new highs every day. These include:
• The stand-off between the Western Powers and Iran over their nuclear programme tightens global supply with the EU agreeing to an embargo on oil supplies from Iran starting this summer.
• The Pound Sterling remains weak against the US Dollar, the global petro-currency. This means Brent crude oil at $124 per barrel reaches a record high in £ prices.
• Financial problems at Europe’s aging refineries may affect local UK supply after PetroPlus, owner of Coryton refinery in Essex, filed for bankruptcy last December.
• Asia and other emerging economies’ demand for crude oil continues strongly.
Madderson continued: “Given this volatile background it is possible that diesel prices could reach 150ppl and petrol 142ppl by Easter providing yet more “windfall” VAT revenue for the Treasury.
“The Chancellor must use this extra fuel tax to cancel the planned 3.02ppl duty increase in his March Budget. This is due to be implemented from 1 August which with 20 per cent VAT will push pump prices up by another 4.00ppl, causing more misery for struggling small businesses and motorists, especially in rural areas.”