ABD - Time to review fuel duties

The Association of British Drivers
Time to review fuel duties

Traditionally, fuel duties in the United Kingdom have always been high. Stemming from the days before the second world war when a car was a rich man's privilege, petrol has been treated as a luxury product and taxed accordingly.

Now that cars are commonplace and most people have come to rely on them, the government has adopted a "green" conscience and decided that fuel needs to be taxed highly on environmental grounds. Ken Clarke, the former Tory Chancellor has recently admitted that this convenient attitude was only adopted after the run on the pound and the government needed to find huge amounts of additional revenue in a hurry. New Labour have been even worse in terms of "green" posturing in order to justify the continued rip-off of Britain's car owners, culminating in the fuel tax protests of 2000.

Much of these attacks on drivers resources were alleviated and masked for many years by the relatively low cost of oil and the fierce competition among petrol retailers engendered when the supermarkets started to open their own outlets, forcing traditional retailers to follow their prices downwards.

However, now we have a serious and potentially long term problem. Putting aside the recent tragic events in the USA, which are likely to be resolved in a matter of months, the increasing demand for fuel in the emerging industrial giants, China and India, is a situation which may well keep oil prices high for the foreseeable future. Potential instability in the Middle East also contributes to volatile markets.

There is very little the British government can do to influence any of the above external factors. Nevertheless, bearing in mind that well over 70% of the cost of every litre is tax, there is something it can do and which is entirely within its power. The time has come for the Chancellor to re-examine the whole concept of fuel duties in the light of this new reality.

One suggestion which has emerged from the government is the idea of universal road charging as a replacement for a partial reduction in fuel duty. This would require a massive investment in expensive satellite tracking equipment which would have to be fitted to all vehicles (at the owner's expense) and would involve a complex calculation based on distance travelled over time, type of road and the prevailing degree of congestion . There are no end of problems associated with this proposal. Firstly the history of high-tech government schemes is one of massive cost overruns coupled with equally massive logistical and technical failures. Secondly, the resulting distortion of traffic flows could be catastrophic. Especially for those in quiet rural and suburban backwaters which may become super rat-runs for drivers trying to avoid the expensive main roads. Thirdly, the civil liberties issues raised by the compulsory tagging and tracking of millions of British subjects makes ID cards look like a picnic by comparison.

The ABD thinks there is a far simpler, saner and acceptable way to achieve fair and acceptable fuel duties and we won't need a super-computer or a satellite to make it happen.

We are proposing that the Chancellor scraps the current fixed rate duty on each litre of fuel and replaces it with a sliding, percentage based levy. When the price of oil and consequently refined petrol rises, the tax percentage should drop. When oil prices fall, the percentage should rise. The intention is to maintain a stable price at the pump and counteract the fluctuations of the world market. In the short term, this may result in a loss for the Treasury but in the medium to long term it should reap compensatory rewards.

High and unstable fuel prices damage our economy. They lead to inflation, job losses and, potentially, a recession. All these things would result in significantly lower revenues for the government, not to mention a drop in living standards for us all. Stable fuel prices would give confidence to much of our industry to plan ahead and also ensure that the public had cash available for the purchase of consumer goods and services rather than having to pour it all into their petrol tanks. For make no mistake about it, the driving public will forego a lot of luxuries in order to ensure they have fuel in their cars.

Petrol is now as much of a staple product as bread or milk for the majority of British families and a car is as necessary as a cooker or a refrigerator. The time has come for the government to accept the fact and ensure that this essential product remains not only available but affordable until such time as a viable alternative can be offered.

There is much potential in hydrogen technologies including the promise of pollution free engines but these remain some ten to fifteen years away. In the meantime, modern cars continue to become cleaner and more efficient all the time. The environmental argument for punitive fuel taxes is largely based on social prejudice rather than scientific fact.

The ABD would like to see the price of petrol and diesel stabilised at about 70-75p per litre with a bias towards a gradual reduction over the long term. Our scheme would be simple and inexpensive to implement and would be mutually beneficial to both drivers and the government. The big question is, will the Chancellor be prudent as we hope and suggest, or merely greedy as we suspect?

This article, by ABD Fuel Tax spokesman Tony Vickers, previously appeared in the Yorkshire Post.