Welcome To Zelo Street!

This is a blog of liberal stance and independent mind

Tuesday 21 August 2012

TPA – Petrol Price Porkie

[Update at end of post]

Just as I was suggesting yesterday that the dubiously talented convocation of non-job holders at the so-called Taxpayers’ Alliance (TPA) might be scraping the barrel in their pursuit of alleged Government waste, they launch an all-new, all singing and dancing “campaign. In association with the Petrol Retailers Association (PRA), the TPA has brought forth a fuel tax initiative.

More guff from Tufton Street

And so important is this “campaign” that head non-job holder Matthew Sinclair himself has seen fit to make a statement about it, and point up all the “Fuel Tax Stands” that are being displayed by retailers from today. He quotes freely from the TPA glossary, with words such as “excessive” and “unfair”. But, before the Fourth Estate starts up, as Jon Stewart might have said, two things here.

One, the figures for motoring taxes that Sinclair and his pals quote are not new: the numbers he quotes are from January last year, and are contained in a TPA “Research Note” called Excessive Motoring Taxes [.pdf]. And two, costs such as that of congestion are waved away in a sea of waffle, and many other costs are ignored altogether, skewing the result in the TPA’s favour.

Apart from congestion, costs of traffic accidents, and police and court costs, are ignored by the TPA. Factoring all those in results not in an excess of taxation over costs of £18 billion, but a shortfall of almost £40 billion. And that brings us to the tax component of the forecourt price of petrol, which the TPA very prominently shows to be around 60% of the total.

This is held by the TPA to be “paid straight to the Exchequer”, as if the VAT you pay on a sit down meal or a swift pint at the local takes some kind of more leisurely route. But there is, this time round, no mention of thought that some of that taxation might be going to provide motorists with a public transport alternative, nor of course that it might also cover some of that shortfall (see above).

Sinclair says that motorists – and before someone suggests otherwise, that includes me, folks – “deserve a cut in ... taxes”. But his only remedy for the shortfall is to dismantle the NHS, slash welfare, remove public transport subsidies, abolish the minimum wage, and reduce public sector pay and pensions until the costs meet with his ideological approval.

And the PRA chairman has let the cat out of the bag in his quote for the TPA, telling that the tax take from forecourts is of the region of £30 billion a year. That means it doesn’t make up for the shortfall in revenue which I calculated in response to the TPA’s “Research Note” of January last year. So, far from being excessive, if you factor in all the costs of motoring, it’s nothing like.

Something to think about when you’re queuing for the forecourt checkout.

[UPDATE 22 August 1010 hours: the press coverage has been less than total today, although the Sun has claimed an "Exclusive", which is a bit rich, considering the TPA published it all yesterday. Political Editor Tom Newton Dunn, no less, has lent his by-line to a piece titled "Fuelish Mistake", which suggests that motorists are unaware how much of their fuel bill goes in tax, by finding a significant sample of, er, three of them.

And the Express doesn't even mention the TPA. Under the headline "Now Garages Sign Up For A Cut At Pumps", it describes the PRA chairman as a "Garages Chief". Maybe it was a rush job cribbed from the Sun's website. You wouldn't put that past the Desmond press.

No trace of the "campaign" is yet visible at the Mail. So another not very enthusiastic response to all that TPA expenditure of time and someone else's money. If the group were a Government department, they'd be clamouring to have it closed down]

1 comment:

R_i_c_h said...

Fuel tax and duty is 150%, both being additive taxes, not deductive like PAYE.

100 - 60 = 40
40 * 1.5 = 60

This is simple maths, and a deliberately misleading use of language to make it seem less intrusive - why do so many journalists simply play along with this nonsense?

Vat is an additive tax. Duty is an additive tax. Why describe is as a deductive tax when it is not?

You take a basic price of fuel and add Duty (60p/l). Then you add VAT to both the duty and the cost.

Lets take a sample liter of fuel. Call it £1.40/l

Lets take off the VAT leaving £1.16 and 24p VAT.
Now lets take off the fuel duty @ 60p. That leaves 56p.

So, simple maths again reveals the truth:
56p Cost
60p Duty
24p VAT

Duty + VAT again equal 150%.

Of course, this 3p extra duty being punted about - lets not forget that is equivalent to a 5% rise in fuel duty - once the VAT element is in place that takes it to over 6%.