The British Government is causing misery for motorists by 'doubling up' on fuel taxes. Motoring costs affect the entire economy – so why isn't the government doing more to reconsider tax laws and cut rates?
Total fuel prices are divided into sections. Section one pays for the fuel; section two is fuel duty; section three is value added tax (VAT). Fuel duty is added to the fuel price, then VAT is added to the total. Therefore, motorists pay 17.5% VAT on the product and on the fuel duty. This is literally tax on taxation.
Fuel duty is 51.52 pence per litre for unleaded petrol, and 48.35 pence per litre for sulphur free diesel. Reducing these rates (including VAT on fuel duty) could significantly help motorists. Initial treasury loses could be recovered through increased economic prosperity.
Motorists can also reduce their tax liability by driving more economical vehicles. The Ford Fiesta ECOnetic achieves 76.3mpg, and emits 98g/km of CO2. However, modern vehicles are financially unobtainable for many tax payers. The Prime Minister recently hinted that tax cuts are probable. Perhaps long suffering motorists will finally get their fair share.