Brownian Economics

Brown calls for oil price effort

Chancellor Gordon Brown has called for a "concerted effort" by oil-producing countries to bring down prices - but is not offering to cut taxes on petrol.

Fuel duty might be fixed, but think of the extra VAT he is creaming off the top. UK (double taxed) petrol is more than twice the price than in the US. I think we have a right to be pissed off about that. If every penny squeezed from drivers was reinvested into the transport infrastructure (as it is in the US) we might be able to stomach it, but 20%... give me a break Gordy!

It interests me that when we talk about fuel tax, the figures presented are always shown as a percentage of the gross. Fuel Tax is a purchase tax, just like VAT. VAT is added on at a rate of 17.5% of the net price. If you were to express Fuel Tax in the same way, the taxation rate would be close to 160% of the net price.

Fuel duties collected by Customs in 2002-2003 amounted to £22.1 billion, and they are predicted to amount to £22.8 billion in 2003-2004 and £24.4 billion in 2004-2005. That amounts to 20.33 per cent, 19.59 per cent and 20.07 per cent of HM Customs' total revenues for those years. (Source: HM Treasury "Budget Report 2004")

We all know that Gordo breaks out in a cold sweat at the mere mention of the words "tax cut", but it doesn't seem to be a problem for some of his European counterparts:

THE French Prime Minister will join European governments today to announce emergency measures aimed at cutting record-high fuel prices, adding to pressure on Gordon Brown to introduce similar relief for British consumers.

Dominique de Villepin will join Belgium, the Netherlands and Italy by introducing populist measures to ease consumer pain but the exact nature of his proposals remained unclear.

Belgium is cutting heating-oil bills by 17.4 per cent to protect homeowners, while the Dutch have given up to ?3,000 to companies within the horticulture sector to reduce the costs of running greenhouses. Italy wants to compensate poor families and says that it may finance the measure with ?extra? dividends from oil companies. Poland and Hungary have proposed fuel-tax cuts.

If you run the same proposal past Brown, he would knock it straight back to you with the standard New Labour guilt trip.... Which hospitals would you like me to shut?

To quote Tony Blair:

"Yes, petrol is expensive. But of the 14p rise since the Budget last year, 12 pence has been in the world oil price. Which is why these protests have taken place all over the world. It's true that it's cheaper elsewhere in Europe. But VAT is often higher there. Income tax is higher. Business taxes are higher. There are road tolls and higher national insurance charges. I am listening to people's anger over fuel duties. For hauliers and farmers to say nothing of ordinary motorists, there is real hardship. But I have also had to listen over under-funding in the NHS. Over extra investment in schools. Over more police on the beat. Over public transport."

Labour Conference Speech, September 2000

"Business taxes are higher." Is that a fact Tony? (hat tip to Timmy):

British companies pay more than twice as much in direct and indirect taxes than their counterparts in the US, according to the World Bank.

The UK used to have one of the lowest corporate tax burdens in the first world. Now, only Holland, Italy and the Scandinavian countries tax their companies more.

British businesses pay 52.9pc of their gross profits in one form of tax or another, the Bank said in its annual report - Doing Business in 2006. In the US, the rate is only 21.5pc; in Japan it is 34.6pc and in France it is 42.8pc.

It is nice to see that in in today's global economy, UK plc is striving to to compete with the big boys. Why would any foreign business want to invest in a country with such a punative taxation system?

We're all in the Brown stuff now. Where's my paddle? Bugger... I can't seem to find it. Help...

Filed under: Politics, New Labour Spin