Fuel duty and VAT

[HiVis]

The treasury are taking 20% of £1.85 or whatever (37p) whereas before they were taking 20% of £1.25 (25p) because the VAT is charged on the total cost, including duty - so we are effectively paying twice; once in fuel duty and then again in VAT which is to a large part increased by the duty costs itself!

Although that is offset to some extent by fuel duty falling to it's lowest level in 14 years (52.95p a litre down from 57.95p a litre a few months ago.

In short, the treasury have knocked 5p off duty, but are getting an extra 12p in terms of VAT, so they are still getting 7p more a litre than, broadly speaking, before the Ukraine crisis. The best thing to do would be to temporarily reduce VAT on fuel to 10 or 15% really, although I am not sure how easy that is or whether it sets a precedent for doing so on all kinds of products.

Personally, I am not a fan of VAT as it's regressive and 20% is a big figure. Fuel is critical to the country and I would reduce it's VAT level anyway. Try telling that to the Green lobby though.

It's also worth noting that tax as a percentage of pump price is lower than it has been for a long time.
https://www.racfoundation.org/data/t...rice-data-page

Interesting Excel graph here on fuel prices
https://www.gov.uk/government/statis...ad-fuel-prices

VAT isn't regressive by a long stretch as it is a tax on consumption. Its quite progressive if you (i) set the rate high enough and (ii) you zero rate those purchases that are required for everyday living only taxing the true luxuries of life. Those who spend on those luxuries pay the most tax, those who only can afford the essentials pay nothing.

[JamesWales]

VAT isn't regressive by a long stretch as it is a tax on consumption. Its quite progressive if you (i) set the rate high enough and (ii) you zero rate those purchases that are required for everyday living only taxing the true luxuries of life. Those who spend on those luxuries pay the most tax, those who only can afford the essentials pay nothing.

Obviously it can be avoided by not buying anything, but the definition of essentials varies by person.

It's regressive in the sense that someone on £20k a year who needs to run a car pays the same rate as someone on £200k a year who needs to run a car.

Thats another debate altogether though.

[North Cardiff Blue]

Obviously it can be avoided by not buying anything, but the definition of essentials varies by person.

It's regressive in the sense that someone on £20k a year who needs to run a car pays the same rate as someone on £200k a year who needs to run a car.

Thats another debate altogether though.

The green initiative is to reduce the number of people using cars and have more efficient boilers and better insulation, what a coincidence everything is going up and people are starting to be priced out of car ownership?

[HiVis]

Obviously it can be avoided by not buying anything, but the definition of essentials varies by person.

It's regressive in the sense that someone on £20k a year who needs to run a car pays the same rate as someone on £200k a year who needs to run a car.

Thats another debate altogether though.

Then you make VAT on petrol zero rated and VAT on news cars 40%. Those buying expensive new cars pay considerably more VAT than those buying a second hand car where the VAT rate is only applied to the margin and not the whole price.

[Rjk]

VAT isn't regressive by a long stretch as it is a tax on consumption. Its quite progressive if you (i) set the rate high enough and (ii) you zero rate those purchases that are required for everyday living only taxing the true luxuries of life. Those who spend on those luxuries pay the most tax, those who only can afford the essentials pay nothing.

yes, theres an interesting case for scrapping all income taxes and increasing VAT instead

[BLUETIT]

Just filled up a Vauxhall zafira , £80 f***ing quid .

The fuels worth more than the car