Petrol fumes.
| Author | Hunt, Stefan |
The recent petrol blockade was the latest eruption of a long-running grievance over `unfair' EU competition and fuel tax policies. Stefan Hunt and Geoff Widdowson report on new research into what keeps the FDs of medium-sized haulage companies awake at night
Mention road haulage and most people will immediately think of September's dispute over taxes on fuel, when UK road haulage interest groups blockaded fuel refinery plants and disrupted fuel distribution around the country. In a matter of days the UK was hit by forecourt shortages of both unleaded petrol and diesel. Panic buying made the problem worse and resulted in problems for essential services across the country.
Now that the initial disruption is over, we must wait to see the political consequences for this month's budget review. It will also be interesting to observe any effects on government policy in the next few years.
This inquiry, however, began 18 months ago, before these problems. We decided to research the role of road haulage in transport policy in the UK after the truckers' conflict with the Labour government in early 1999.
They were concerned about the fuel duty escalator tax and the level of vehicle excise duties (VEDs) in the UK, compared with those on EU competitors. The survey was intended to help us understand and test the support for and validity of some of the issues.
The level of excise duty is obviously a critical concern for many suppliers. Tax is a significant proportion of total cost, as most chancellors of the exchequer have realised when levying indirect excise taxes on products such as tobacco, alcoholic drinks and petrol. Budget tactics have generally been to levy an excise tax on goods for which there will be a constant demand in certain price ranges. This cost is then passed on to the consumer.
In addition to the excise tax, value added tax (VAT) is also levied on goods and services at 17.5 per cent in the UK. This compounds the price increases charged by suppliers and makes the end product even more expensive for the consumer.
This is what happened in the first nine months of 2000 -- price increases on a barrel of crude oil in world markets sent up the price of petrol-based products and services. As a consequence, tax revenues to the government increased with little detrimental effect on producers and suppliers, although individual disposable income was reduced in the short term, which can temporarily reduce inflationary pressure in the economy.
However, in both the recent dispute and the earlier conflict over the fuel duty escalator...
To continue reading
Request your trialCOPYRIGHT GALE, Cengage Learning. All rights reserved.
