The facts

Let's correct a few myths.

Myths:

Fuel duty is much too high
We pay too much tax on our fuel
High fuel prices are due to high fuel duty
Motoring has become much more expensive
We pay too much tax for the cost of motoring
Road transport is not important in the battle against climate change
We pay more tax than other European countries
T he hauliers are having a tough time

MYTH: Fuel duty is much too high

FACT: Fuel duty has not been increasing in line with inflation since 2000, with the small increase in October 2007 the first in years. This has kept fuel duty artificially low. Even with these small increases announced in Budget 2007 (2p increase in October 2007, 2p in October 2008 and 1.84p in April 2009), fuel duty in 2009 will still remain 11% lower in real terms than it was in 1999 [1].

MYTH: We pay too much tax on our fuel

FACT: Tax, as a percentage of fuel, has not been this low since 1993 [2]. With unleaded at £1 a litre and duty at 50.4p, and VAT at 17.5%, tax as a percentage of the total pump price is 65%. In 1991 it was 64%, in 1992-3 it was 66% whilst in 1994 it was 70%. Even with the planned 2p increase in October 2008, if oil prices remain the same, tax as a percentage of the total price will still be only 67.7%, which is below 1994 levels.

Source: Transport Statistics Great Britain 2007 (The graph is available as a larger image)

MYTH: High fuel prices are due to high fuel duty

FACT: Higher fuel prices are down to high oil prices not because of fuel duty. High oil prices are out of the Government’s control, and will increasingly become more of a fact of life. They are due to oil scarcity, wars in oil-producing countries and global inflation, certainly not because the Government has been increasing fuel duty. Given the inevitability of high fuel prices it makes economic and environmental sense to reduce our reliance on fossil fuels, and move towards a low-carbon economy, rather than wanting to attempt to drive more and get cheaper fuel.

MYTH: Motoring has become much more expensive

FACT: The cost of motoring has fallen 10% in real terms since 1997, whilst the cost of travelling by rail and bus has increased 6% and 13%, respectively [3]. Revenues raised from any fuel duty increases must be ring-fenced for public transport to improve travel choices, which was promised by Gordon Brown in Budget 2000 [4].

MYTH: We pay too much tax for the cost of motoring

FACT: There are many costs to society from motoring that we all have to pay for:

Cost to the NHS for the 262,000 casualties, including 3,500 fatalities, each year which result from road accidents
Cost to the nation’s health due to air pollution
Cost to the economy due to carbon emissions
Cost of maintaining roads
Cost of transport police and traffic officers

MYTH: Road transport is not important in the battle against climate change

FACT: C02 emissions from transport are rising, and emissions from road transport alone make up 25.7% of the UK C02 emission total, so road transport is a very important sector to tackle. The small increases in fuel duty announced in the 2007 Budget are expected to result in carbon savings of 0.16 million tonnes of carbon by 2010 [5].

MYTH: We pay more tax than other European countries

FACT: This is not true. Several countries have very close or the same rates to us. Fuel tax is just one tax. Other countries have a much higher vehicle purchase tax, and other countries have tolls on their roads.

Top 5 EU petrol prices, January 2008 [6]

Netherlands	114.3p
Portugal	106.2p
Germany	105.2p
Finland	104.8p
Belgium	104.6p

Tax as a percentage of the price of petrol, Top 5 countries, January 2008 [6]

Sweden	64
Belgium	63
German	63
UK	63
Finland	62

MYTH: The hauliers are having a tough time

FACT: Hauliers already receive a lot of support from the Government. From 1 October 2007, the Reduced Pollution Certificate scheme has been extended so that hauliers buying a Euro V compliant vehicle up to 31 September 2009 can claim a discount of up to £500 a year on Vehicle Excise Duty (VED).

VED rates for Heavy Goods Vehicles (HGVs) have been frozen since 2001 and in October 2007 the Government announced that the rates will continue to be frozen in 2008/09. The government also offers reduced fuel duty on “environmentally friendlier” fuels, such as biofuels, compressed natural gas and liquefied petroleum gas.

References

[1] Para 7.36 of Budget 2007
http://www.hm-treasury.gov.uk/media/F/D/bud07_chapter7_273.pdf

Budget 2007 sets out fuel duty rates for the next three years. Main fuel duty rates for 2007-8 will increase by 2 pence per litre (ppl), with these changes in rates deferred until 1 October 2007. Main fuel duty rates will then rise by 2ppl on 1 April 2008 and 1.84ppl on 1 April 2009. By 2009-10, main fuel duty rates will still remain 11 per cent lower in real terms than they were in 1999.

[2] See Transport Statistics of Great Britain 1996, Table 2.4, (page 37), DfT / ONS 2007
http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/edition...
and Transport Statistics of Great Britain 2007, Table 3.3, DfT / ONS
http://www.dft.gov.uk/pgr/statistics/datatablespublications/tsgb/2007edi...

[3] Parliamentary Written Answer, Jim Fitzpatrick, Parliamentary Under Secretary of State for Transport 17 July 2007, Hansard Column 246W
http://www.publications.parliament.uk/pa/cm200607/cmhansrd/cm070717/text...

[4] http://www.hm-treasury.gov.uk/budget/budget_2000/bud_bud00_speech.cfm

[5] Budget 2007, Chapter 7, Protecting the Environment, Table 7.2
http://www.hm-treasury.gov.uk/media/F/D/bud07_chapter7_273.pdf

[6] Department of Trade and Industry: http://www.dtistats.net/energystats/qep511.xls