Tuesday, May 27, 2008


I drive a BMW 3 Series diesel tourer. I bought it second-hand a year ago. It was my first diesel since I switched from the old Landrover I used to drive when I was farming full-time. Main reason I bought a diesel was to cut down on the my motoring costs. For much of the last 15 years, the taxpayer had been paying for most of my fuel - but for the last year, I've been paying for it myself. This focuses the mind. Last week I filled up and it cost me £71. I couldn't believe it. It seems only a few weeks since I crossed the £60 barrier. So I'm on the side of the truckers. This post is my declaration of interest.

As always, its a matter of degree. In general, I'm in favour of what we might call a 'Green Tax Switch'. I've always accepted that the cost of motoring would rise - at a sustainable rate. What's happening at the moment is not sustainable. And if its a 'switch' where are the compensating tax reductions. And its no good just blaming the price of crude oil, or OPEC for restricting supply (which is untrue anyway) or speculators (which may have some truth). By far the biggest part of the increase is going straight to the Treasury in tax. So don't lets have any of this stuff about the Government not having the ability to cushion the increases.

A potentially bigger problem for the Government is its proposed changes to excise duty. This deadly little explosive is growing like a cancerous tumour, just waiting for the time when its true horror breaks out into the open. Again, if it was a 'Green Tax Switch', the Government could get away with it. But its not. As moving the excise duty burden from high polluting cars to less polluting cards, the Chancellor took the opportunity to hugely increase the total tax take - so its a 'tax take' not a 'tax switch'. And Government Minister, Phil Woolas is telling Kirsty Wark (with an insufferable arrogant tone) as I write this that the excise duty changes will definitely go ahead - but the Chancellor still has an 'open mind'. Kirsty looked a bit gobsmacked by the sheer brazenness of the doublespeak. Perhaps he was mimicking Rory Bremner.

Truth is that our Labour Government has got a very big problem. The taxpayers of this country have finally sussed them out. Suddenly, we've realised that Gordon Brown is a destructively high tax grabber. And he can't stop, because he's already spent it. Finding £71 every time I fill up my car is a bit of a headache for me. Gordon Brown is suffering from something much more serious and it could be terminal.


Dr. Christopher Wood said...

Is the petrol tax a fixed rate tax or a proportional tax?

Dr. Christopher Wood said...

Don't you think this oil fuel crisis is a turning into a sickening blame game crossed with musical chairs? The government is trying to put the blame on the oil and gas companies, the oil and gas (methane) companies blame limited supply and insatiable demand combined with too much government taxation at the pump and the oil producing countries are blaming bubble speculators ... what happens when the music stops?

So who’s to blame - and how do we fix it?

Glyn Davies said...

Christopher - Don't know. I always thought it was a fixed percentage (at about 75%) but the Minister seemed to be saying last night that the percentage falls as fuel price rises - so there could be an element of proportionality. I will try to discover the true position. Any help is welcome.

Blame for this sort of situation rarely lies in just one place. Its almost certainly a supply/demand imbalance made worse by some speculation. Music doen't stop. The tunes just change. Supply (from other sources) increases and demand decreases (or in this case increases more slowly) and the speculators will move on. It can't be easily fixed, but Governemnt can cushion the blow a bit - particularly since the higher price increases the Treasury receipts. The VED changes are down to the Government, and they would have been much more acceptable if the change had been 'tax neutral' - and accepted as a 'tax switch' rather than resented as yet another 'tax hike' - and a stealthy one at that.

Jerome Burns said...

"Main reason I bought a diesel was to cut down on the my motoring costs. For much of the last 15 years, the taxpayer had been paying for most of my fuel"

Says it all really!
When you have to pay for most of it your self, you look for ways to save money!

Dr. Christopher Wood said...

It does seem that as a nation we have backed ourselves into a box lacking a rear exit.

I agree the government can cushion the blow quite a bit and if it does so in an open and sensible way they might just redeem themselves before the public - but fat chance of that happening given Gordon Brown's penchant for taxing the nation into the ground.

Petrol/gas here in the USA is going through the roof - Americans are very unhappy about it, but the price of filling a Landrover or BMW is still about half that in the UK. News reports suggest that Houston in Texas with the hikes in oil is enjoying a boom.

I know many Brits think America gets most of its hydrocarbons from the Middle East - but Brits are wrong on this score. From my general reading the #1 supplier of oil to America is Canada, followed by Mexico/Saudi Arabia (toss up between Mexico and Saudi Arabia for the #2 spot) - I think Iraq or Venezuela are in the #3 and #4 spots (not sure which order). The power generation industry in the USA hardly uses any imported oil – US electrical power stations are powered by coal, methane (both from US sources of supply) and nuclear power. Oil imports into the USA are used mainly in the transport industry and to run private vehicles. If Americans could be persuaded to run around in electric-rechargeable cars then the USA could dent its reliance on oil imports.

Dr. Christopher Wood said...

Opps, I think Iraq and Venezuela are respectively in the #4 and #5 spots (or visa versa), sorry, long day.

Glyn Davies said...

jerome - I think we are making the same point.

Actually, the paying for it myself bit didn't make a difference - since my fuel allowances as an assembly Member were based on mileage travelled and not receipts. It was 40p per mile for the first 10,000 miles and 23p per mile thereafter - so there no profit in it. Perhaps there might have been for anyone who drives a low powered diesel - but not now.

Gareth said...

"It was 40p per mile for the first 10,000 miles and 23p per mile thereafter - so there no profit in it"

No profit at 40p (or 23p) a mile, what plannet are you living on Glyn?

Jerome Burns said...

So you have were getting 40 pence a mile, if the car does a modest 35 to the gallon, being as it is diesel, that works out at £14.00 for a 35 mile journey!
C'mon Glyn, you were raking it in back and forth.

Anonymous said...

Yes I agree Gareth, what planet is Glyn living on

By the time you take into account all the other expense of running a car, Tax, MOT, wear and tyre of tyres etc, and most of all the deprecation of the vehicle, 40p per mile is no where near enough.

Dr. Christopher Wood said...

Let's assume that Glyn covers an average of 60 miles per hour and makes 20p profit out of every 40p mile. A quick calculation gives Glyn 12 pounds an hour 'profit'. Much of this driving would be done in the evening or very early in the morning - frankly, I don't think many would be prepared to drive their car 60 miles for £12 'profit'.

At the 23p per mile, even if Glyn made 12p per mile, his 'profit' would be just £7.20 per hour. ‘A tidy profit’!

Btw, this is how one American national newspaper reports the European fuel crisis ...


What is really surreal is the amount of fuel tax lumped onto the price of petrol (and diesel) at the pump; quoting from the Washington Post article: “British government, for example, charges a $3.77-a-gallon fuel duty and a 17.5 percent consumption tax (VAT) on top of that -- the highest levels in Europe … By contrast, U.S. drivers pay an average combined federal and state tax of about 47 cents on a gallon of unleaded and 53.6 cents on a gallon of diesel, according to API, a U.S. trade association.”

Glyn Davies said...

all - some interesting opinions on the cost of running a car here. The reimbursemnt of costs to Assembly Members was (don't know what it is now) was based on what the Inland Revenue considered to be the true cost based on all costs including deprecaition. Anything above these figures would have been considered 'profit' and been subject to tax.