Paul's blog

Wouldn't it be great if the government could do the right thing by the people?

What i'm talking about in this instance is the rocketing price of oil, and the impact it is having on the cost of living. A disclaimer first I guess - I drive a car that you could probably fairly call a 'gas guzzler' (~25MPG) so if it's costing me a lot to drive around then it's arguably my own fault. As a Norfolk country dweller however, the oil cost has more of an impact on me than just transport... with no gas here, our house is heated by oil too. And that's without factoring in rising prices of goods in general due to increased costs for haulage etc...

So what do I think should be done?

So far as 'bringing fuel prices down', there are really a limited number of options, but i'm going to talk about 1 in particular - the idea that the government could temporarily reduce the tax levy on fuel such as petrol, heating oil etc. etc. in order to ease the stress on the economy and regular working people. 'Doing the right thing by the people'.

Let's think about some numbers. Let's say that at the last budget the government expected the fuel price for the period to max out at £1 per litre (using Petrol as an example). Let's say that the government set their tax on Petrol at 75% (just an arbitrary figure mind you). This means therefore that they expected to receive up to 75p in every £1 into the treasuries coffers to go towards all those important things that it needs to pay for (you know, speed cameras and stuff, hehe) What has actually happened is that the price has far exceeded this, and with the tax still set at the same percentage, more money is flowing into the Mr Darling's purse than was expected. Why can't this be put to good use to ease the pressure on us householders and the economy as a whole?

This feels to me a bit like the no-brainer sensible government that we never ever see. Imagine the benefits if such a strategy was employed for perhaps even only a short time while the oil price stabilises (if it does!). It'd be muchos kudos for the government, it'd help the economy and I see no reason why it couldn't happen without impacting the governments environmental targets etc. etc.

Perhaps the tax discount would only apply to heating fuels, car fuels etc. and not fuels for 'luxuries' such as air travel. Perhaps it would be a 'look what we're doing, really think about your consumption of oil based products!' spin to help achieve the governments clear target of making everyone buy frugal and environmentally friendly cars.

Am I missing something in that there is a reason this wouldn't work?

Of course, it'll never happen... and it's one of many reasons why I and many others i'm sure have a general feeling of 'what's the point' when it comes to selecting and supporting the political leadership in our fine country. The current guys at the top won't govern the way i'd like them too, but then nobody will...

End of rant, comments welcome...

P

EDIT: It seems that the rate of tax on fuel is a fixed amount, then VAT is charged on top, so the base rate isn't changing but the government IS getting more VAT. I guess this makes it more complex to reduce prices and still balance the books... the VAT amount would need to be capped I guess? I wonder how these price rises affect petrol co. profits (mega-earning BP / Shell etc.). I wonder if they take a fixed or %age cut?

EDIT 2: Duty rates - http://tinyurl.com/6hc3yh - can't wait for those 2 more price rises eh!