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Real cost of inflation
Page 30
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IT WAS STATED recently in Commercial Motor that hauliers' costs have increased by 20 per cent over the year — yet the newly published Tables of Operating Costs, when compared with the 1978 issue, suggest that (for a 22-ton artic) costs have risen 53.9 per cent, rendering them virtually useless for direct comparison.
One realises that the basis for calculation of the wages and depreciation elements has been drastically altered, but the argument for including the cost of VAT on fuel is hardly tenable.
The Tables suggest that rates recover (for a 22-ton artic on a 1000-mile week) the sum of £20.50 VAT, which represents an annual income of £922.32. This is not a cost, merely sterilization of say a quarter of this amount, say £5.12 per week. There might be some justification in charging the investment value which at 15 per cent will represent 77p, which means 1/2p per gallon, setting current fuel cost at 96.05p and not the proposed £1 .10p .
A. V. CANN1NGS, Norwich.
We reported that another source had estimated a 20 per cent increase in haulage rates. Our costs show a greater Increase because, as you correctly point out, we have used inflation accounting when calculating depreciation. Failure to include all rue! VAT charges is, we contend, rinancial rolly, since the user constantly stands out the VAT while he operates vehicles and uses fuel. Only when he no longer buys fuel and can reclaim his VAT will the sheet be wiped clean. — Editor