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Expect more misery at the pumps unless oil prices dramatically rise
Page 22
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CHANCELLOR ALISTAIR Darling's preBudget report ("Darling's fuel duty hike slammed by industry" CM 27 November) has left the general public with the impression that the overall cost of fuel will not rise.
The Federation of Petroleum Suppliers would like to challenge this view.
The fuel prices at the pumps are unlikely to change. since the increase in road fuel duty will be offset by the decrease in VAT.
However, it leaves VAT-registered traders worse off because they can reclaim VAT but not duty. The result will be a knock-on rise in the price of goods as transport costs increase.
Road hauliers. including tankers delivering fuel, have always been able to reclaim VAT on fuel, but are unable to reclaim the duty.
In real terms, therefore, the price of a litre of fuel to them increases by 2ppl. Farmers and other businesses that use fuel in production of their goods will similarly find their costs considerably increased.
Consequently, in a budget designed to lower prices, the consumer will again be faced with higher costs of goods, which will offset the decrease in VAT The Chancellor has brought in the duty increase at a time when oil prices have fallen back, following record highs. Unless there is a dramatic surge in oil prices to make him reconsider, consumers can expect further pain in April, when this Government imposes yet another duty increase.
Keith Ashton Forecourt division co-ordinator Federation of Petroleum Suppliers