ANALYSIS: Fuelling the Economy?

MARK McLAUGHLIN
Edinburgh Evening News
8 March 2010

As motorists face another increase in fuel tax at the end of the month, isn't it time the Government stopped punishing road users, asks Mark McLaughlin

EVERYONE knows that Chancellor Alistair Darling has an enormous problem on his hands. Of course, as he feverishly hunts for ways to pay back Britain's staggering GBP 178 billion debt he will be looking for lots of folk to clobber.

Anything that can be dressed up as a green tax - punishing those terrible pollution creating motorists - is going to look particularly tempting.

It is against this backdrop that petrol taxes are set to go up again by another 3p on 1 April.

That will see the average price for unleaded hit 115p a litre, not quite the levels that saw hauliers take to the roads in convoy to protest two years ago, but not a million miles from them.

While among some there is now an acceptance that motorists are always going to get it in the neck, there is a growing opinion that enough is enough.

The outcry over the latest increase is being led by the AA, whose spokesman Luke Bosdet describes the Government's petrol policy as "bananas".

New research carried out by the AA has found that fuel duty is rising in the UK at twice the rate it is on the Continent and at five times the rate in some EU countries.

"We looked at the figures between 24 November, 2008 and 15 February this year," explains Mr Bosdet, "and found that the average increase in other European countries was 5.07 per cent. In the UK, tax has gone up by 11.46 per cent in that period. This compares to just 2.23 per cent in the lowest country, Austria.

"Scotland is almost a cause célèbre for those complaining about petrol prices as volunteer drivers, who take sick people to hospital in their own vehicles, north of the Border were amongst the first to complain about the increase in their expenses.

"If you're only getting paid 24p a mile, the further you travel the more your expenses go up until it gets to the point where it's no longer cost effective to volunteer any more.

"It costs the NHS four times the amount of money to transfer people to hospital in a taxi than it does to pay a volunteer driver, but they're having to rely on them more and more. It's bananas.

"This is just the starting point of the cracks that will start to appear if drivers are forced off the road by ever-increasing fuel duty, which already accounts for 66 per cent of the price at the pumps."

The AA says consumers are struggling at the bottom of the food chain when it comes to fuel prices.

Oil speculators push up prices, then the Government slaps on tax, before hauliers and forecourt operators take their cut.

The result is higher and higher costs at the till.

And it is not just soaring fuel prices that motorists have to swallow, with the cost of on-street parking, permits and fines all seeing inflation-busting rises in Edinburgh in recent years.

Despite the growing tax burden facing motorists, environmental campaigners say the latest move is justified, as the overall cost of motoring is actually falling.

Richard George, road and climate campaigner at the Campaign for Better Motoring, said: "We support the principle that fuel duty should be gradually increased in line with inflation.

"While fuel prices have gone up, the real cost of motoring has reduced dramatically in the last ten years.

"According to the Department of Environment and Climate Change, the cost of running a car has dropped by 14 per cent since 1997.

"In that time the cost of rail has increased by 13 per cent, and the cost of bus travel has increased by 24 per cent.

"Given that buses are often used by some of the poorest members of society, we think it's time that something was done to redress that balance."

The Taxpayers' Alliance, though, is withering in its criticism, insisting fuel duty is simply being used as a "sin tax" to punish people for using their cars in the age of global warming.

"It's a bigger sin tax than cigarettes or alcohol," says the alliance's research director, Matthew Sinclair.

"Some people want to tax motorists off the road, but the reality is that even if you double the number of people using public transport, which will never happen as the current infrastructure just couldn't cope, you would only take 10 per cent of drivers off the road.

"The irony is the Government is taxing people to get to the very offices and industries that are keeping the UK economy moving."

Mr Darling defends the move as part of his overall plans to balance the budget.

A Treasury spokesman says the fuel duty rise is part of plans to halve the UK's massive deficit over four years, once recovery is secured. "Alongside other tax measures and slower spending growth, fuel duty increases are an important part of this deficit reduction plan, as well as supporting the Government's environmental agenda," the spokesman said.