The Goverments view on Fuel prices
Was bored one night so thought i would e-mail the Goverment on fuel prices this is there response
Dear Mr Craik
Thank you for your email of 3 September 2006 to the Treasury about fuel
prices. I am replying from HM Revenue and Customs, which is the Department
which deals with the maintenance and development of policy on fuel taxation.
The current high price of road fuels has been the result of increases in the
world price of oil, driven largely by strong global demand. The price of
fuel is fundamentally linked to international oil market conditions, so high
oil prices are a problem globally, not just in the UK.
In the UK, a high proportion of the cost of fuel is tax. The policy of
successive UK governments has been to charge duty on road fuels at rates
which will not only raise sufficient revenue to fund essential spending
programmes, but also take account of the environment. Fuel duties play an
important role in helping the UK meet its Kyoto target for reducing
greenhouse gas emissions. The Chancellor has therefore resisted calls for
a substantial cut in fuel duties.
Tax on fuel in the UK is made up of excise duty and VAT. The current rate
of excise duty on the main road fuels is 47.1 pence per litre (ppl). VAT is
charged at 17.5 per cent on the retail cost of the fuel, including the
excise duty. I am afraid I cannot comment on whether the figures you have
quoted for extraction, refining and transport of the oil are accurate, as
these are commercial matters.
I should add that the recent fuel price increases are not connected to the
rate of fuel duty in the UK. Fuel duty rates were last increased in October
2003, and following cuts in rates in 2000 and 2001 to encourage less
polluting fuels, main duty rates are now lower in cash terms than 1999, and
16% lower in real terms than in 2000.
The lower duty rate with a higher pump price has also caused a fall in the
total tax as a percentage of the price of road fuels. In 2005-06, total tax
as a percentage of price was 68% for petrol and 66% for diesel, the lowest
I hope you find this helpful.
HM Revenue and Customs
Transport Taxes Team
100 Parliament Street
London SW1 2BQ