Fuel duty and VAT

[HiVis]

I understand fuel duty is paid per litre (nearly 53p for petrol pl) and that VAT is then added based on the overall cost.

If that is so, would the extra gained in VAT cover the 5p reduction of a few months ago and could any further cuts in duty be offset by VAT?

VAT is charged on the whole price, so if the cost is say £1, which includes the 53p duty, then the cost is £1.20 at the pumps. If fuel duty drops to say 40p per litre, and we suspend reality for a second and assume the petrol companies pass on the saving, then the pre VAT cost is £0.87 and the with VAT price is £1.04

[Brian]

VAT is charged on the whole price, so if the cost is say £1, which includes the 53p duty, then the cost is £1.20 at the pumps. If fuel duty drops to say 40p per litre, and we suspend reality for a second and assume the petrol companies pass on the saving, then the pre VAT cost is £0.87 and the with VAT price is £1.04

This is why I cant understand why the government don't do more.

When fuel was say £1 per litre, to keep figures simple, the gov. we getting about 64p per litre in duty and vat (so cost 36p per litre). If raw costs at double to 72p per litre and £2 at the pumps it means they're then raking in £1.28 per litre in taxes so they're happy as Larry.

A 5p per litre cut is pathetic considering they're making a shed load more than they were a few months ago.

Am I missing something - they could take 40p of a litre and still be earning more?